A reader recently posted in the forum about his disappointment with UFB Direct and its small ACH transfer limit. He learned from the bank's CSR that the external transfer limits are $2,000 daily and $5,000 monthly. For customers hoping to take advantage of UFB Direct's very competitive money market rate, these low limits can make it more difficult. When I reviewed UFB Direct last year, I was told that certain customers can have this limit raised. According to the UFB Direct official:
Once you are with UFB Direct for 90 days and have used the standard inbound transfer, had no NSF incidents and have maintained the account in good standing, you can fall in the standard high limit: $15,000 daily and $25,000 monthly.
In my opinion, even these higher limits are too low. UFB Direct isn't alone. Other banks and credit unions have small transfer limits.
Incredible Bank is a little better with its limits, but they're still low especially for outbound transfers. According to Incredible Bank's FAQs, there's a "maximum of $10,000 ACH transferred out per day and a maximum of $50,000 ACH in per day." At least Incredible Bank publishes their limits. Few banks or credit unions make this information easily accessible.
Last week I reported on CIT Bank's new online transfer service. Just like UFB Direct, the transfer limits are low. The maximum transfer size is currently $5,000 per day. I was told they're working to increase this to $250,000. Hopefully, this will be done soon.
I just posted on PenFed's ACH transfer service which has a $5,000 per day limit. So banks are not the only ones that have small limits.
ACH Transfer Overview
For those not familiar with ACH transfers, ACH is short for Automated Clearing House Network. It's the network that provides an electronic funds transfer process between bank accounts. ACH is most commonly used for direct deposit. For internet bank accounts, ACH transfers are typically the main way that customers can make deposits and withdrawals.
There are two ways to initiate an ACH transfer. You can make a deposit into an account by "pulling" funds from your account at another bank. This is done using the ACH transfer service of the bank that's receiving the deposit.
You can also make a deposit into an account by "pushing" funds into that account by using another bank's transfer service.
Why the Small Transfer Limits?
I've been told by several officials from the banks and credit unions that the main reason for the small transfer limits is fraud. Here's what a PenFed official told me in 2009:
At this time, PenFed's position on this policy is largely due to matters concerning fraud.
There is a high risk of fraud associated with ACH transactions - both incoming and outgoing. For outgoing electronic transfers, PenFed prefers to offer wire or Western Union services to our membership. Though not completely void of fraud, these services provide a higher level of security that greatly reduce the opportunity for fraudulent activity to occur.
Typically, the transfer limits apply only at the bank where you are initiating the transfers (the ACH originator). A reader provided a good explanation about why financial institutions have such restrictions on their own ACH service but not on ACH transfers made at other financial institutions. His comments were directed to ProvidentNJ Direct, but they are relevant to any bank:
It's a question of bank liability.
If a bank initiates an ACH credit to another bank, that ACH credit cannot be recalled. So if a bad guy somehow got into a Provident account and transferred all the money out, Provident would be liable to the account holder (assuming it was a consumer -- not a business -- account) and it would have no easy way to get the money back from the bank to which it was sent.
On the other hand, if another bank initiates an ACH debit from a Provident account, then NACHA rules allow Provident to reverse the transaction -- no questions asked -- for 60 days if they can produce a Written Statement Under Penalty of Perjury (WSUPP) from the account holder. They are under no obligation to investigate the legitimacy of the WSUPP.
Even though there does seem to be legitimate concerns about fraud, I wonder if there are other reasons why banks have small ACH transfer limits. Small transfer limits make it harder to move your money. So when rates fall, deposits won't leave as quickly.
Banks That Don't Have Small Transfer Limits
There are several internet banks that don't have small transfer limits. Ally Bank is one. You can see the transfer limits when you're logged into your Ally account in the transfer money section. I'm not sure if this varies by customer. The limits that I see when I'm logged in are $150,000 per day and $600,000 per month.
I wouldn't label EverBank's limits as large, but they aren't small. When I reported on EverBank's new bonus rates, I learned that its online ACH transfers are limited to $50,000 per day and $200,000 per month.
It should be noted that these ACH transfer limits are often not well documented by the banks, and even the CSRs are sometimes unaware of the details. Also, the limits often change and can vary by customer. It's common for new customers to be subject to smaller limits. Please keep these issues in mind if you have seen different limits than what I've described above.
Have you been disappointed in low ACH transfer limits at your bank or credit union? What's your favorite bank or credit union for making ACH transfers?