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How Long Does It Take To Fund An Account By ACH?

CDInvestor1
CDInvestor1   |     |   17 posts since 2015

Recently I filled out an application for a large CD online with an out of state US bank that came highly rated by Bauer Financial.  My application was approved, and two days later the funds were taken out of my checking account for the CD.  However, the bank issuing the CD did not open my CD account until SEVEN DAYS AFTER my funds were withdrawn from my checking account, and they will not credit the interest due to me for those seven days, saying the account hadn't been opened yet.  When I called the bank, the representative gave me the runaround, saying they needed 3-4 business days for "processing" the new account.  Their disclosure documents say nothing about a delay for processing and state that "Funds from electronic direct deposits to your account will be available on the day we receive the deposit".  The representative tried to get me to believe that the bank didn't receive the funds until "three business days" after they were taken out of my checking account.  Where were the funds all that time?  Out in space?  Are there any regulations to govern this situation?  Should I file a complaint with their State Regulator?  Thank you.



Answers
pearlbrown
pearlbrown   |     |   2,299 posts since 2010
Which institution is this?    The Bauer 5-star rating is excellent, but it speaks to the health of the institution and not the efficiency of the back-room operations.

I would first escalate the discussion to a Customer Service manager and take careful notes of the explanation given.   If the answer is not reasonable or you are still not satisfied, I would file a complaint with the CFPB (Consumer Financial Protection Bureau) - (see here) and quote the details of the explanation given to you and by whom.

Good luck and please keep us posted. 
lou
lou   |     |   676 posts since 2010
I am also curious about the identity of the bank.
paoli2
paoli2   |     |   2,221 posts since 2011
These are issues you should have gotten resolved before you chose to put your money in that bank.  The banks I deal with usually always state they understand about the processing time so they will give me the interest as of the date when received in the mail.  That is why I will send the Application priority mail and get a receipt for the date mailed.  If the funds were withdrawn from your checking account they should have started earning interest on the date withdrawn from my experience. 

There are ways around their holding up the interest on your funds but you need to work it out with the bank "before" you let them get a hold of your money.  I have a feeling  the State Regulator would tell you they were going by "their" rules for their accounts.  This is why one must know what the rules are "before" doing business with certain banks.  I know sometimes the ACH withdrawals are not always with a 24 hour framework but if you have proof of exactly "when" they got your funds, I would think you should have begun getting interest as of that date.  Something smelly here about their approving your application which shows they had one on hand and still making you wait that long before paying interest.  I have never had that problem once they had the application and funds in hand.
CDInvestor1
CDInvestor1   |     |   17 posts since 2015
Thank you to everyone who posted answers to my questions.  I was leaning toward letting this go, but that is what the bank is counting on.  I don't want this bank to take advantage of anyone else in the future, so I will be contacting upper management and give them the opportunity to state their reasons for the delay (again) and see if they will budge.  If they don't change the date of the CD, I will file a complaint with the CFPB--thank you for the link, pearlbrown.  I will keep you updated on the developments, and when this issue is resolved, I will name the bank.  If you have any other suggestions about what I can do, please let me know.  Thank you again for your responses.
paoli2
paoli2   |     |   2,221 posts since 2011
CD1  Thank you for being proactive with this matter.  It can help all of us in the future.  Looking forward to what we hope will be good results for you.
me1004
me1004   |     |   537 posts since 2010
CDInvestor1, I think you absolutely should file a compliaint with the appropriate banking regulator (there is a guide at this Website to direct you to the right one for the bank in question) as well as the new CFPD. I believe you would have multiple justifications for  it.

One thing, and I can't confirm this, but I was told previously by a bank I was involved with that banking regulations require the receiving bank to "process" (that was their word) all incoming overnight ACH  credits  by the time the bank opens in the morning. Again, I can't confirm that, but that is what the bank told me. But if so, then the bank you are  speaking about is violating that. It would be one thing to not post until that evening, but you must be  credited by the morning of that day, if what I was told is correct.

Secondly, you make a very good point about the disclosures saying that electronic direct deposits will be available on the day they receive  them. I'm not sure that actually applies here, as 1),  that might not apply until the account is opened and  2), your's might not count as a "direct deposit," as it was a pull and the account was not yet opened to be directly deposited into, so you could not do  it "direct," maybe. But maybe it  does apply; It certainly ought to. But I would include that disclosure point in your complaint regardless -- that might very well be a contractual obligation.

I also have to think you have a very good point that they can't take your money and then claim it takes them four days to process it -- without any notice to you of that or remuneration to you for that period; it is illegal for them to do that with a check, and I have to  think the same would apply to an ACH  transfer -- but again, you would have to confirm. You never agreed to give them a free short-term loan or welfare for the bankers! 

Also, while I suspect  the entire delay was the  new bank, it is possible that your bank you drew from delayed in putting the money into the ACH. I'm not sure how to follow up on that. But even so, there still are the other four days that the new bank admits to delaying.

And lastly, please post your experiences in a review  post at  this  Website for that bank. Everyone would like to have that as a warning they can check under that bank's name if they are considering opening an account there. 
lou
lou   |     |   676 posts since 2010
I would be interested in knowing the rate you got for the CD. If it was high enough I wouldn't sweat the 7 days of lost interest (which is really the interest you would have earned if the money was left in the checking account). Life is too short to screw with this. I have better things to do than filling complaints and arguing with customer service agents. Now if they permanently lost my money, that's another story.
CDInvestor1
CDInvestor1   |     |   17 posts since 2015
paoli2, I've taken out many online CD's, made payment by ACH, and have never had this happen to me before, either.  Therefore, I didn't think I needed to work out this issue with the bank beforehand, especially since their disclosure documents said nothing about a "3-4 business day processing period" AFTER my money was withdrawn from my checking account.  Not something I would have thought to bring up beforehand with them when using an ACH payment.  I have my bank statement showing proof of the day the funds were withdrawn from my account, and the CD account wasn't set up until seven days later. The question that they are dodging is, did they receive the funds the same day they were withdrawn from my checking account?  If not, where did those funds go for seven days?  There should be some regulation guidelines to help me in this situation.
paoli2
paoli2   |     |   2,221 posts since 2011
CD Investor1:  When it comes to our finances, I think a bit of paranoia can be helpful.  They can all be so different.  I think the suggestion Pearl gave you about contacting the CFPB is a good first step especially since you seem to have all the proof to show them why you are concerned about the bank's actions.  At some point, maybe when you get this resolved, I would appreciate knowing which bank did this to you so I can make sure to avoid them.  With interest rates so low, I use many out of state banks and want to make sure I avoid that bank.  Thanks.
CDInvestor1
CDInvestor1   |     |   17 posts since 2015
I just wanted to give you an update to the situation, but I don't have much to report yet.  I spoke with another representative of the bank, and she would not budge on moving the date of the CD back, or in the alternative, give me any extra interest as damages.  She could not tell me where the funds were all that time; she just kept repeating that their policy allowed them "three business days for processing".  I have filed a complaint with the FDIC Consumer Affairs Division, who governs this particular bank.  After doing a lot of research, I believe that this bank has violated Federal Regulation CC, which deals with the availability of funds by electronic transfer, among other things.  When I hear from them, I will update this thread with more details.  I will caution right now to anyone interested in a long term CD, when using Bauer Financial's website, do a lot of research before committing!  Thank you for your suggestions, everyone.
CDInvestor1
CDInvestor1   |     |   17 posts since 2015
I wanted to update you as to the status of my situation with this bank.  I took out an online CD with them; the money to fund the CD was taken out of my bank account by ACH transfer; and the CD account was not opened nor funded until six days after being taken out of my bank account.  I filed a complaint with the FDIC Division of Depositor and Consumer Protection in their territory.  I recently received their response, and they have sided with the bank.  As it turns out, "time deposit" accounts, like CD's, do not fall under Regulation CC; they are not considered "transaction" accounts like checking or money market accounts, which do fall under Regulation CC.  Therefore, ACH transfers into a CD account do not have to be deposited within one day of the transfer.  Apparently, there IS NO time limit!  The bank also claimed to use a "third party independent contractor" who held the funds for the six days before the bank received them, although the "independent contractor" was never identified in the bank's response.  So the funds really WERE "out in outer space" all that time, and I'll never know where they were.  And finally, in a document that you can only access while filling out the bank's application, and no where else on the website, it states that the applicant agrees that "Transfers normally take 3-5 business days to settle with both institutions".  So I must caution anyone who takes out a CD with this bank to expect to not have access to your money for up to seven days, depending on weekends and holidays, as they take that long to "process" your account transfer.  And the bank representative confirmed with me when I was taking out the CD that they "do not guarantee to lock in the interest rate" on the CD until they open your account.  And they don't open your account until they already have your money.  They are clearly not a consumer oriented bank, as evidenced by what happened to me.  They are KS StateBank, located in Manhattan, Kansas.  Their CD rates are listed on at least two websites at the present time.  If you decide to invest with KS StateBank, do so with your eyes wide open.
Ricochet
Ricochet   |     |   230 posts since 2010
Anonymous   |   Oct 17, 2015   |   Comment #240
I got our accounts opened on 10-16. I have made several calls since my wife and I applied and were instantly approved on 10-6.The employees are very nice and I know they are doing the best they can, they simply have so many accounts to open.Want to say thank-you so much to Kelly, who was able to help me on the phone and get our accounts opened.