(Fraud!) The Obvious Reason Online Bank Transfers Take So Damn Long

Ever wonder why it takes so long for online banks to move your money around?

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 PT 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 savings 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.

Avatar About Philip Taylor, CPA

Philip Taylor, aka "PT", is a CPA, blogger, podcaster, husband, and father of three. PT is also the founder and CEO of the personal finance industry conference and trade show, FinCon.

He created Part-Time Money® back in 2007 to share his advice on money, hold himself accountable (while paying off over $75k in debt), and to meet others passionate about moving toward financial independence.


    Speak Your Mind


  1. Avatar bill freeman says


  2. Avatar BarbaryAnne says

    Wells Fargo debits the money from my account on the day the transfer was set up to take place (in this case, a Thursday), and then holds onto it for FIVE DAYS. My other account (at a different bank, one to which I had already used WF to make a transfer, so this was repeat business for them) did not show the money coming in until the following TUESDAY evening!!! This is just insane.