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Retirement Savings: How Much Should I Save Each Month?Inside Look at ACH Transfer Speeds at Online Banks
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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
