Wednesday, October 22, 2008

The Holdup at Online Banks: What's Taking So Long?


From the Wall Street Journal (hat tip to Sean for bringing this story to my attention): The Holdup at Online Banks (link here)

The banks say they want to avoid fraud, such as transfers from bad accounts, or when someone else gets hold of your online sign-on name and password and tries to move your money somewhere else. According to numbers compiled by the American Bankers Association, about $969 million was lost to fraud in 2006, the most recent year available, out of about $41.7 trillion in checking-related transactions, a number kept very low in part because of aggressive risk-management practices. But even when attempted fraud is factored in, more than 99.9% of checking transactions are good.

At the end of the story, the Journal tells you what to do if you want to move money between different institutions.

Enjoy.

12 comments:

  1. DrewOctober 22, 2008 at 12:14:00 PM EDT

    This has aggravated me for a while. Discover card will credit your payment to your account and free up the available credit the same day you make a payment.

    Juniper pulls stunts like what the article described. They will hold an electronic payment a full week before freeing up your credit line.

    I use ING Direct for a savings account and the article is correct that they wait a full week till the funds become available. I also find that paper checks clear faster than any electronic transfer lately.

    ReplyDelete
  2. GlobCredit.comOctober 22, 2008 at 12:16:00 PM EDT

    Drew, I bet this article will be useful for a lot of my readers. We're all dealing with this stuff.

    I've always wondered why it took so long!

    Now I know.

    ReplyDelete
  3. DanielOctober 22, 2008 at 12:29:00 PM EDT

    Drew, not just Discover, but Amex as well, they free up my available credit on my Blue Cash as soon as I make a payment on-line.

    ReplyDelete
  4. DanielOctober 22, 2008 at 12:33:00 PM EDT

    "Juniper pulls stunts like what the article described. They will hold an electronic payment a full week before freeing up your credit line." .....That is what subprime companies do..they are on a forced fee-based system to make money like Capital One. They hold your line for a week after payment in the hopes that you go over your limit and then give a BS excuse in order to justify the holding of your line.

    ReplyDelete
  5. DrewOctober 22, 2008 at 12:59:00 PM EDT

    When I called Juniper to complain about them holding my credit line, they told me that the bank can pull back the funds for up to a week.

    Yeah well, my card gets PIF every month and that's never happened. It's a low line card that I use just to accumulate miles, but still.

    ReplyDelete
  6. clutchcargoOctober 22, 2008 at 1:00:00 PM EDT

    My local credit union says bank to bank transfers are prohibited. I have found no electronic way to get funds into my Penfed account.

    ReplyDelete
  7. JoshOctober 22, 2008 at 7:27:00 PM EDT

    Same thing for checks. Why is it that Bank of America holds a check for a week when the issuer of the check has informed me the next DAY after I deposited the check the funds were already out of his account?

    I asked the branch manager this question as was told that it's all about your account history. In other words: The longer you bank with the bank responsibility the better your risk score is. Responsibily I was told included A) Never being overdrawn. B) Never depositing a check that is returned for non sufficient funds or any other reason. C) Never being late on any credit product at the same bank. D) Your credit history at the time of the checking account approval.

    (To reiterate, if you innocently deposit a check from someone and for no fault of your own the check is returned for any reason, YOU are burned for it - burned in the sense of ruining your "risk score" as I said above AND having limits placed on your account for bank to bank transfers)

    Of course, we can't see our credit worthiness "rating" at our banks.

    ReplyDelete
  8. TheVibeRAIDEROctober 22, 2008 at 7:41:00 PM EDT

    Like the article says, I always plan ahead.

    Also, "Hang on. 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."

    If you're not satisfied with the process, you need a back-up plan.

    ReplyDelete
  9. GlobCredit.comOctober 22, 2008 at 7:44:00 PM EDT

    You're right, V. I am going to Europe. : )

    ReplyDelete
  10. TheVibeRAIDEROctober 22, 2008 at 8:05:00 PM EDT

    LOL! I didn't mean THAT back-up plan!

    ReplyDelete
  11. GlobCredit.comOctober 22, 2008 at 8:08:00 PM EDT

    Haha. That's the backup I'm choosing.

    ReplyDelete
  12. AnonymousOctober 25, 2008 at 8:32:00 PM EDT

    clutchcargo said...

    My local credit union says bank to bank transfers are prohibited. I have found no electronic way to get funds into my Penfed account.

    ***************************************

    You can initiate it from the PENFED side. I transfer funds into my PENFED account every month.

    ReplyDelete
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