Everything You Probably Didn’t Know About Bank Holidays

American flag over cash

July 4th is one of the 11 bank holidays observed in the United States.

And yet: Though the branches may be closed, the digital channels still are accessible, which means that the bank holiday, which traces its roots to 1870, really is not a total closure of the financial services industry after all. The ATMs still work. The apps still work. The P2P payments still work.

The Initial Quartet

There were four original federal/bank holidays, including New Year’s Day, Independence Day, Thanksgiving Day and Christmas Day, upon Congressional Acts in 1870. The U.S. took its cue from decades of bank holidays across the pond, where the Bank of England had dozens of holidays shuttering banking outlets, tied to all manner of Christian festivals. By the 1870s there were fewer than a half dozen bank holidays in the U.K.

The holiday schedule observed by the Federal Reserve System dictates closures in the States. The holidays, as they now stand, include New Year’s Day, Martin Luther King Jr. Day, Washington’s Birthday (Presidents’ Day), Memorial Day, Juneteenth, the Fourth of July, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day and Christmas Day. In the event that any of these holidays fall on a Saturday, banks will still be open on Friday. But in the event that the holiday falls on Sunday, banks will be closed on the subsequent Monday.

What’s Affected

Though, as noted above, the online channels are still operant, there are still some delays in some of the most basic functions of banking. And those delays are not “addressed” until the next business day.

We’re thinking here about direct deposits, most readily. Because the Fed’s closed, transactions don’t post until the day after a holiday. And that means, of course, that paychecks and benefits are effectively “staggered” until banking operations resume in full force and processing is completed. The same holds true for bill payments and ACH transactions. The age-old practice of carrying cash holds some particular appeal during bank holidays — and so does planning for pending transactions to “hit” the accounts the next business day.

The ‘Other’ Bank Holidays

There’s another type of bank holiday, we note — and one that’s not necessarily tranquil. We’re talking here of the holidays where banks might be closed to ward off banking runs and banking failures. The Fed’s site notes that in the dark days of the Depression, and for a whole week in March 1933, all banking transactions were suspended under the directive of President Franklin D. Roosevelt.

FDR’s proclamation mandated that “no such banking institution or branch shall pay out, export, earmark, or permit the withdrawal or transfer in any manner or by any device whatsoever, of any gold or silver coin or bullion or currency or take any other action which might facilitate the hoarding thereof; nor shall any such banking institution or branch pay out deposits, make loans or discounts, deal in foreign exchange, transfer credits from the United States to any place abroad, or transact any other banking business whatsoever.” The move came in the wake of thousands of bank failures.