Why Do Online Bank Transfers Take So Freakin’ Long?

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Online Bank Transfers

Long time reader J shared a very informative article with me recently: The Holdup at Online Banks (from The Wall Street Journal). The article explains the long wait time involved with transferring money in and out of online savings accounts. If you have one of these accounts, you know what they’re talking about.

If you have a high-interest online savings account, a product highly promoted here at Prime Time Money as a way to save more money, you know that the time it takes to transfer money in and out of this account is one of the biggest drawbacks to having it.

There is the problem of how to make deposits. But that can be remedied by keeping your brick and mortar bank, making deposits there, and then transferring the money to the online account. That’s also where things slow down. The transfer can take up to a week.

Why Do Transfers Take So Long?

So in this high-tech, get-it-now world we live in, why do these account transfers take so darn long? The Wall Street Journal article explains just that:

“…these large transfers move in steps. Banks have slowed down the process further to reduce the chance of fraud…“

…[the bank] 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…

In many cases, the receiving bank gets the transfer the same day. Under rules established by Nacha [the Electronic Payments Association], 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.”

So when are things going to change for us? When will the system speed up? The article briefly mentions that,

“…Europe already has a much faster system, and systems to speed up the process here are under development, though they won’t be ready for at least a couple of years“

The Short-Term Solution

Until then, I recommend attaching your online savings account to their respective bill pay accounts. Transfers to your bill pay accounts are usually instantaneous. Since most bill pay accounts will come with a ATM card you’ll be able to access your cash faster than if you tried to transfer it out to another bank.

Thanks for sharing the article J. If any of you other readers have a informative article or money-saving idea, let me hear from you. Use my contact page.

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