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ACH Transfers and Linking External Accounts at Dollar Savings Direct
POSTED ON BY Ken Tumin
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:
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).
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 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).
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.
Etrade and WAMU theoretically allow external llnks but deleted links also count in the some unknown life time limit.
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.
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..
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.
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.)