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Home >> Manage Your Money >> Personal Finance
Electronic Money Transfers are Instantaneous
Who had my money? I transferred funds between online accounts from one bank to another by means of Electronic Funds Transfer (an ACH transfer). Bank A debited my account on 12/29/06, claiming that this was the date the funds left their institution. Bank B credited my account on 1/3/07, maintaining that this was the date they received the money. My understanding of an ACH transaction is the process of a simultaneous accounting entry, through the FRB, where one account is debited and the other credited. This brings me back to my question: where was my money for the six days in question? Am I out the $700+ in interest?
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 ACH transfers are not instantaneous, and they do pass through multiple electronic hands on their way. It is normal for two business days to elapse between the date of origination and the date of reception and posting. In your case, Friday, December 29, was followed by three non-business days. Wednesday, January 3, was the second business day next following.
In the paper check environment, funds often exist in two places at once. The depository institution gives credit before the paying institution charges the check-writer's account. We call that "float."
In the ACH environment, when a credit transaction is initiated, there is float, too, but because the transaction starts with the funds-losing institution, the effect is exactly the opposite of the effect in the paper environment. Based on experience, the originating institution was probably not charged for the transfer until the transaction settlement date, which would have been January 3. Don't be optimistic, however, about your chances for convincing that institution that it should pay you interest for the five (not six) days from 12/29 until 1/3.
Published on BankingQuestions.com 2/14/07
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