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ACH Transfers and Linking External Accounts at Dollar Savings Direct


Update 3/17/09: Rate has fallen to 2.05% APY.

With rate cuts becoming more common at Dollar Savings Direct (rate just recently dropped from 3.50% to 3.20% APY), you might be thinking about withdrawing your money. Unfortunately, Dollar Savings Direct doesn't make this easy due to the following reasons:
  • Can't initiate a withdrawal from another bank
  • Limited to 2 linked accounts
  • Creating a second link requires mailing in a voided check
  • The process of linking a second account is slow
The bank-to-bank transfer system of an internet bank is an important feature that is often not well covered. Bank-to-bank transfers are done through the Automated Clearing House network (ACH). When you log into your account and initiate an ACH transfer request, your request is batched with all other requests during that day and are submitted together at some later time.

The three important features of an ACH bank-to-bank transfer system include: 1) process of linking to external accounts, 2) limitations on the size of the transfers, and 3) the speed of the transfers. All savings accounts and money market accounts have limits on the number of certain types of withdrawals (which includes ACH). Federal regulation limits these to 6 per statement cycle.

Dollar Savings Direct does well on features #2 and #3, but it is lacking on feature #1. The ideal system for linking external accounts allows you to electronically link an unlimited number of checking or savings accounts with only a trial deposit verification system. You would not be required to mail in forms or voided checks.

For your second link, Dollar Savings Direct not only requires trial deposits, but it also requires you to mail in a voided check along with an authorization form. I called yesterday and asked about how long this might take for the second account to be linked. According to the CSR, Dollar Savings Direct will mail an account verification form to the other bank which must then be mailed back to Dollar Savings Direct. I was old this process can take up to 3 weeks depending how fast the other bank resonds.

A FW member mentioned that Emigrant Bank may allow other ways to verify the external account if the other bank is taking too slow. If you call, they may be willing to allow other options. He mentioned one case in which they accepted an emailed copy of a bank statement as verification and initiated the trial deposits the same day.

Another oddity of Dollar Savings Direct is that this voided check is not required when you link the first account during the account opening process. This has allowed many people to link savings accounts and brokerage accounts. One note about linking savings account is that the pair of trial deposits are followed by a pair of debits. So between these debits and the initial deposit, your savings account will be hit with 3 ACH withdrawals which could put you over the limit of allowed withdrawals.

For the full review of Dollar Savings Direct savings account and CD, refer to my Dollar Savings Direct review post. Note, Dollar Savings Direct and Emigrant Direct are both internet divisions of Emigrant Bank (FDIC Certificate # 12054).
Related Pages: DollarSavingsDirect, savings account

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  |     |   Comment #1
I opened an account with Dollar Savings Direct funding with my GMAC on-line savings account on 1/20.

The initial deposit showed up on 1/21. Moved more money on 1/21 that showed up 1/22. Mailed a canceled check, statement copy and required form to add my Bank of America checking account as the second funding account on 1/21. Small deposits showed up 1/29. Initial $1000 deposit was cleared on 1/28, the rest on 1/29.

Adding that second account is a bit of a pain. It certainly seems like sending a statement copy with the other paperwork speeds things along.

On the absolute plus side--tranfers in and out happen within a day so no lost interest when pulling funds in. There is, however, a five day hold on incoming funds but interest is being credited during that time.
  |     |   Comment #2
I have several of these internet banking accounts...and have discovered that using HSBC as a sort of "hub" lets me move money as I need to. Just a small comment. Clear Sky still is tops (at the moment) in my book.
  |     |   Comment #3
After opening a second DollarSavingsDirect account using an account that was different than the two linked to my existing account, I noticed I could transfer funds from either DollarSavingsDirect account to any of the three external accounts.
  |     |   Comment #4
If Dollar Savings Direct doesn't allow you to initiate EFT from an external bank, then that means that the funds transfer limits imposed by Dollar Savings Direct will be followed and that you could not circumvent them by trying to doing it from an outside bank account.
  |     |   Comment #5
One thing to note - ACH transfer are not the same as Direct Deposit Government payments and wired funds. There is usually a hold placed on EFT funds by the receiving institution. So you can't just immediately withdraw that money at the other bank once you believed the money was moved.
  |     |   Comment #6
One bright side is that you can atleast have 2 linked accounts. Many anks do not allow any external links at all.
Etrade and WAMU theoretically allow external llnks but deleted links also count in the some unknown life time limit.
  |     |   Comment #7
While I like Dollar Savings rate, there are two issues that I have with them that I have never had with any other online bank.

1. I have 3 separate accounts for 3 separate goals. If I want to transfer money from account A to account B within the bank, it does not automatically process that day. it transfers the next day. Not a big deal until you get to issue #2.

2. I opened account A through a link with my checking account. I then opened account B with funds from account A. Now, I cannot transfer funds from my checking account to account B, or vice versa. And to be able to link them I need to send in a voided check of the account that is already linked to account A! Stupid.
  |     |   Comment #8
i sent a voided check.. it arrived there and was processed very quickly... no big deal...

But what i do hate is how long it takes for money to transfer.... If i initiate a transfer from dollar savings direct in the evening, it takes like 2 days before it gets sent to other bank...

well can't complain i guess..
  |     |   Comment #9
Re the previous comment, that's 1 business day, which is actually very good -- particularly since it's done in a way where you don't lose any interest.

BUT...they dropped to 3.05 APY as of Wednesday night.

IF the rate stays competitive, DSD is a great choice for someone for whom two linked accounts is sufficient. Of course, what is the chance both of those statements are going to be true.

BTW, while you can't pull from DSD via another bank's ACH system, pushes into it will work fine from any institution that doesn't first require verification *withdrawals*. So, for instance, GMAC Bank and E*Trade can push into DSD, while Provident-Direct and Alliant CU can't.
  |     |   Comment #10
Rate dropped to 3.05%
  |     |   Comment #11
I had set up an external account with my WaMu Bank linking this new Dollar Savings Direct account on 01/28/09. After two trial deposits were verified, the external account was confirmed for future ACH transfers. As of tonight, the Dollar Savings Direct link has been removed from my WaMu lists of accounts for transfers. Not sure why...I don't have the strength tonight to talk to overseas CSRs. :(
  |     |   Comment #12
Did you by any chance call DSD something other than Savings at WaMu? Once I had verification from Alliant CU to UFB Direct seem to work OK, but soon Alliant had to remove it. Reason given was that UFB told them the account type I listed was wrong. So I re-did it and it worked fine. (Of course, I'd never be able to add DSD to Alliant's system, since Alliant does a matching verification withdrawal.)

Sometimes this stuff is inscrutable. I used to pay off by B of A Visa by having it pull directly from Alliant Savings. But once I added a checking account at Alliant, B of A's system insisted on pulling from that instead -- even after I changed to the full 14-digit account number. (At Alliant your base 8-digit member number is incorporated into all your account numbers.) I ended up with a $10 overdraft fee as a result, which Alliant graciously removed. Now there is simply no way to get B of A to pull from my Alliant Savings instead of Checking, even though none of my other accounts have trouble doing so. Strange stuff. (Sorry for what turned out to be a wordy response.)
  |     |   Comment #13
I'll try linking my WaMu account again. I'm fairly certain I listed it as a checking account. Perhaps some sort of bureaucratic-void at work here. Thanks for the help. You were not wordy at all :)
  |     |   Comment #14
Dollarsavingsdirect.com has the worst process for non-renewal of a CD and the customer service is terrible.  There is only one way to cancel the renewal of a CD and that is online.  If this is your only acct and you forget your password and the five security questions you answered a year and a half ago, there is no way to reset the password easily without calling customer service.  Once I finally got on the site to stop the renewal, I learned I was one day early and could not. 

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