Holdovers are transactions that have not been processed by banks. One example of a holdover is a check that is received too late on a certain day and is therefore not deposited until the following business day. The check is in a state of limbo where the funds are still present in both the sender and recipient's accounts. This phenomenon is known as holdover float, where there is a duplication of funds in two different accounts.

Holdover float can create several challenges for banks. Not only do the banks lose interest on the holdover float that is not yet allowed for investment, but it can create a number of risks as well. When a check is in a state of holdover float, the sender of the check may use the same funds in their account illegally or fraudulently by floating checks and kiting, which can cause significant losses to both banks and customers.

To prevent holdover float and mitigate the risks associated with it, banks have systems and policies in place to help them manage the timing of transactions and deposits. Banks often have procedures in place to review and monitor customer accounts for activities that could indicate fraudulent activity and have automated systems in place to flag questionable transactions. Additionally, banks have policies in place that require customers to deposit checks in a timely manner in order to prevent them from becoming holdovers.

Holdovers are an important aspect of banking that needs to be managed carefully in order to protect both banks and customers from the risks associated with them. If a check is received too late on a certain day and needs to be held until the following day, banks should be sure to monitor the transactions associated with it to mitigate any potential fraudulent activity or losses. In addition, customers should also be sure to deposit checks in a timely manner in order to reduce the risk of them becoming holdovers.