Why It Takes Two to Four Days To Transfer Funds Online

The WSJ stepped into the high yield online savings world with an article on transfer times using online banks. There wasn't a lot of new information but it was a decent recap of why it takes 2-4 days to process a transfer.

The WSJ stepped into the high yield online savings world with an article on transfer times using online banks.  There wasn't a lot of new information but it was a decent recap of why it takes 2-4 days to process a transfer.

The Journal article describes this process of someone sending a transfer from an online svings account to their online checking account. at a different bank:

"What happens during that time? ING sends transactions in batches during the day to an automated clearinghouse, which sorts them and moves them to the receiving bank in a matter of two to four hours, according to Arkadi Kuhlmann, chief executive officer of ING Direct USA, a unit of ING Groep NV, and Elliott C. McEntee, chief executive of Nacha, the Electronic Payments Association, a not-for-profit group that oversees the automated clearinghouses.

In many cases, the receiving bank gets the transfer the same day. Under rules established by Nacha, money that moves on Monday should be available by the end of Tuesday. If the transfer slips to early Tuesday morning, the money should be available first thing Wednesday morning."

Banks then wait another day or two to ensure that the funds are good and have cleared.  According to the article, depositing money into an online account took even longer- 5 business days, as ING wanted to make sure the funds were good.

Here are some tips for speeding up the transfer process:

  • Plan ahead if you know you need the money.
  • See if your money market account ccount has check-writing privileges.  Paper checks can actually clear faster than electronic transfers.  
  • Compain if the transfer takes more than 2 business days to receive money you "pushed" from another bank.  NACHA, the organization thatruns the ACH system can levy fines on banks if they hold your money for too long.

The article states that Europe has a faster transfer system and that enhancements to speed up the transfer process are under development.  That's good news for consumers.  In the meantime, if you've done a transfer and it takes more than 2 business days, call your bank and complain.  

So, if you need your funds from an online account, plan ahead.

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