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Federal Reserve, the Economy and CD Rate Forecast - Sep 21, 2021Inside Look at ACH Transfer Speeds at Online Banks
POSTED
ON BY Ken Tumin
An important feature of online savings accounts is the electronic transfer in which the customer can initiate while logged into his or her account. This makes it easy to fund the account and make withdrawals. Online banks use the electronic network called Automated Clearing House (ACH) for these transfers. You'll often see me refer to ACH transfers in my reviews of the online banks.
This WSJ article takes a look at the issue of electronic transfer times. The author describes how she was trying to transfer money from her ING Direct account to her Bank of America account so she could use the money for a car purchase. She initiated it at ING Direct on Monday morning. It showed up as pending at Bank of America on Wednesday, but it wasn't accessible until Thursday.
This shows two issues of a transfer. First there's the speed of the transfer which is the number of days after you initiate the transfer and before you see it in the destination account. Second is the hold time which is the time it takes the bank to make the money available to you for withdrawals. There's actually another issue to worry about in transfers. It's the time the money is not earning interest. This is the number of days after the withdrawal from the source account and before the deposit at the destination account.
In the article it's interesting to note that the author was told of the "three-day good funds model" by an HSBC executive VP as the reason behind their 3-day transfer time. This is supposedly the time that the bank wants to make sure the funds are good before it lets you have them. The issue at HSBC Direct is not only the 3-day transfer time, it's also the fact that there are at least 2 days in which your money isn't earning interest. I can't think of why security would justify this.
The article does offer this advice: "If the transactions take longer than two business days, complain to the bank where the transfer originated." So if you haven't already, be sure to complain.
HSBC Direct isn't the only one to have slow transfers. Below is a list of the online banks that's divided into ones with fast ACH transfer times (1-2 days) and ones with slow ACH times (3-4 days). These are based mostly on inputs from readers. I also have experience with some of these. Most banks just quote a standard 2-3 business-day transfer policy, so it requires actual experience to know the true speed.
This list just includes a few of the online banks that I was able to quickly get some ACH times. If you have experience with ACH transfer times for your bank, please leave a comment. There can be some variation in the transfer times. As the article states, it's best to initiate transfers early in the morning.
Fast Transfers ~ 1 to 2 days (0 to 1 day of lost interest)
This WSJ article takes a look at the issue of electronic transfer times. The author describes how she was trying to transfer money from her ING Direct account to her Bank of America account so she could use the money for a car purchase. She initiated it at ING Direct on Monday morning. It showed up as pending at Bank of America on Wednesday, but it wasn't accessible until Thursday.
This shows two issues of a transfer. First there's the speed of the transfer which is the number of days after you initiate the transfer and before you see it in the destination account. Second is the hold time which is the time it takes the bank to make the money available to you for withdrawals. There's actually another issue to worry about in transfers. It's the time the money is not earning interest. This is the number of days after the withdrawal from the source account and before the deposit at the destination account.
In the article it's interesting to note that the author was told of the "three-day good funds model" by an HSBC executive VP as the reason behind their 3-day transfer time. This is supposedly the time that the bank wants to make sure the funds are good before it lets you have them. The issue at HSBC Direct is not only the 3-day transfer time, it's also the fact that there are at least 2 days in which your money isn't earning interest. I can't think of why security would justify this.
The article does offer this advice: "If the transactions take longer than two business days, complain to the bank where the transfer originated." So if you haven't already, be sure to complain.
HSBC Direct isn't the only one to have slow transfers. Below is a list of the online banks that's divided into ones with fast ACH transfer times (1-2 days) and ones with slow ACH times (3-4 days). These are based mostly on inputs from readers. I also have experience with some of these. Most banks just quote a standard 2-3 business-day transfer policy, so it requires actual experience to know the true speed.
This list just includes a few of the online banks that I was able to quickly get some ACH times. If you have experience with ACH transfer times for your bank, please leave a comment. There can be some variation in the transfer times. As the article states, it's best to initiate transfers early in the morning.
Fast Transfers ~ 1 to 2 days (0 to 1 day of lost interest)
- E*TRADE
- EmigrantDirect/DollarSavingsDirect
- Providentdirect
- GMAC Bank
- CNBBankDirect
- E-LOAN
- Countrywide
- ING Direct
- OnBank
- HSBC Direct
- FNBO Direct
- EverBank
- Capital One
- Nationwide
- OneUnited
Countrywide has next day ACH speed but they have been placing 3 to 4 business day holds on incoming funds before making them available.
They did not mention anything about a hold on the funds, though.
FRANKLY, this is an issue that has bothered me for decades. Sending a request for TF through the ACH is NO DIFFERENT from sending a check through, since the banks no longer even have to send through the hard copy of the check. Yet, the law requires that a check be credited to your account the day you give it to the bank (and thus, interest starts accruing) -- even if a hold is placed on it. But the law has no such requirement for sending through the ACH where a printed check is not involved. Yet, there really is no difference between the two!
I suspect this is because the law has not caught up with technology -- initiating ACH transfers in the past was not common, and I don't even know if individuals could do that, but advanced technology has made that common.
The ACH holds are nothing compared with the 10-11 business day holds that are routinely placed on large transfers.
One thing I do when evaluating rates vs. convenience is to calculate how many days it would take at a higher interest rate to make up for the float. For instance, if you have a local bank paying 4% that you could put funds in via a check vs. an option to get 4.25% online, but there may be a 2 day ACH float delay where you make no interest, it will take 32 days at the higher rate to break even before the higher rate starts making you more money that you would have gotten had you gone with the lower, but faster-crediting deposit choice.
Wachovia was pathetically slow; they took up four business days. This isn't good for the purpose of bill paying. Also, when I transferred money externally, I would get charged $3.00. I won't have anything to do with a bank that nickels and dimes me on everything.
Lastly, FNBO may be slow, but they're one of the safest - a clear example of cutting one's nose off to spite one's face if ending a customer relationship with them because ACHs are slow. It's a matter of careful planning, yes?
I won't get rich doing this, but it makes me smile each time I do it.
You are partially right on your logic. It is not what you think, but what you don't know, that it counts.
Banks do not operate on our logic, but they depend on their computers, to invest the float that you just created for ING and the delay of payment that is suppose to come to ING form Capital One.
You see, the moment you pressed the pay button at ING, your money were instantaneously transferred to either treasury direct or some other derivatives that pay interest. Capital One is still earning interest from their investment on your money until Tuesday.
You created double float on the same money and no bank is loosing any sleep over it. Capital One will pay you interest (if any) on the money transfer requested on Friday not on Monday or Tuesday. I did some calculations myself many times with many banks and the truth is customer always looses. The system is rigged against the savers and for benefits of the banks.
As mentioned, Countrywide and E-Trade both have reasonably fast ACH transfer systems, often next day to arrive. But both have multi-day holds on incoming ACH funds. I believe E-Trade's policy is the afternoon of the third business day after your transfer, while Countrywide I believe is on the fourth business day.
I think the security argument about those hold times is a bunch of ****... If I turn around and ACH funds from those accounts to another bank like SalemFive and their EOne checking account, the money there is available immediately upon arrival (no hold times). Same with some other banks where I have accounts. So if they can do like that, why not Countrywide, E-Trade and the others.
I'm not sure if there's a connection. But the other banks where the incoming funds seem to be immediately available also are those that don't have their own internal ACH system access for their customers, i.e., you're having to push money into those accounts from other banks.
I was going to open one of Capital One's new accounts lately, but then got into the details, and found they place a five business days hold on all incoming ACH funds... GM Bank is similar I believe, 4 or 5 day holds. Thanks but no thanks.
--John in Los Angeles
1. HOW MUCH YOU CAN TRANSFERS ONE TIME(BANK LIMITATION PER ACH TRANSFERS PER DAY)
2 TO USE SOME BANK PROMOTION WHICH REQUIRE DIRECT DEPOSIT, IN CASE, IF YOUR EMPLOYER DO NOT PROVIDE YOU DIRECT DEPOSIT THAN YOU HAVE TO USE ACH TRANSFERS TO MIMIC AS DIRECT DEPOSIT. BUT I DO NOT KNOW WHICH BANK'S ACH TRANSFERS CONSIDER AS DIRECT DEPOSIT(THIS TOPIC HAS LOTS OF DILEMMA AND WILL REMAIN AS MILLION DOLLAR QUESTION TILL DATE)
IF YOU WANT TO FOCUS SOME LIGHT ON THIS TOPIC, IT WILL BE VERY HELPFUL TO ALL!!!!!!
Bank of America will take a customer's Keep the Change savings and transfer the money into the sweeps account at night and re-transfer it back to your own savings in the morning. The catch is that they don't bother to tell customers this when they apply for a savings account. Go figure.
FNBO direct, HSBC direct have extremely slow ACH transfer times as per :
http://bankdeals.blogspot.com/2008/10/inside-look-at-ach-transfer-speeds-at.html
http://online.wsj.com/article/SB122463632484157009.html
But etrade, ingdirect etc are fast.
Please correct this.
Published at :
Wrote: http://people20.blogspot.com/2008/10/fnbo-hsbc-have-extremely-slow-ach.html
FNBO Direct: https://www.fnbodirect.com/welcome/MarketingDropDownProdList
HSBC direct : https://www.hsbcdirect.com/1/2/1/default/contact?code=MIW0000155
"/blog/2008 ACH Rules", however these rules must be purchased for around $55.
http://www.nacha.org/About/default.htm
A customer can report an ACH rule violation and banks can be fined by nacha.org.
Also - many banks holds are different depending upon whether the funds are PUSHed or PULLed:
Based upon my experience, the following banks - which hold funds if they are pulled into the account - do NOT hold funds that are pushed in:
CapitalOne
Countrywide
FNBO
Provident-Direct (Maryland)
But under their policy, those ACH'd funds would not be available to you for withdrawal -- even though they would count toward your balance perhaps -- for 5 business days.
If you already have a funds balance in that GM Bank account, then you already have other funds available, so it wouldn't matter much. But if the ACH'd funds were the only funds in that account, I believe you'd be waiting 5 days before you could touch them.
Please correct me if you have had a different experience with this. But I just last week looked at, and then passed on, opening a new account with them because I didn't like their 5 day hold policy on incoming ACH'd funds.
--John in Los Angeles
I have accounts at Countrywide and Etrade, both fast transfer institutions but with 3-4 business day hold times. I know if I pull funds into either of those accounts using their own systems, they apply the standard holds.
I'm pretty sure, but not 100%, at some point in the past I've also pushed funds one way or the other between the two...and got hit with the same long holds... But I'm not 100% sure that I pushed before.
Anyone else have direct experience with this??? Are you avoiding hold times when you push funds into the receiving account, instead of pulling???
--John in Los Angeles
Yes, I am SURE that when I push funds into
Countrywide (Online Savings Acct)
CapitalOne (MMkt or Online Savings Acct)
Provident Direct (HighYield Savings)
that the funds are immediately available - no holds.
However, if the funds are pulled in, there definitely are holds.
So what are they,their funds transfer almost always take over 3 days.
NACHA rules says funds should be available after settlement by the Federasl Reserve, about 3 days. Sadly, NACHA will not step in to enforce their own rules unless a depositor initiates a complaint, not with them, but with the bank that transferred the funds...even though the initiating bank is not the one denying access. This really makes no sense.
It appears to me that NACHA doesn't want to alienate their membership by stepping in and would rather have the "non-guilty" bank do their dirty work!
ACH transfer of funds from my closed account on
Monday morning this week. It is Thursday morning
and I still have no funds received in my bank account.
Don't know what to make of this timing!
Thanks for any comments/answer
But the worst is IGO bank and FNOB they are the slowest.takes 4 days. Like to get rid of the latter at the end of this year. Any suggestions of other banks with fast transfers