Where is the money resting?

G

gullmacm

Registered User
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6
Just curious if anybody knows the following:

When you do a bank transfer and your bank says it will take 3-4 days to clear, where is the money located for those days before it ends up in the destination account??? Who is earning the interest on the transferred money on its route to destination?
 
gullmacm said:
When you do a bank transfer and your bank says it will take 3-4 days to clear
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What sort of transaction are you referring to - a cheque lodgement, electronic transfer etc.?
where is the money located for those days before it ends up in the destination account??? Who is earning the interest on the transferred money on its route to destination?
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Where the money has been withdrawn from the source account but has not yet appeared in the destination account then I presume that it resides in some financial institution's account and they benefit from any interest that it might earn.
 
Cash is cleared immediately.
There is only a Clearance Cycle when it comes to cheques & the time for this is 5 working days. Reason being ( & you will only appreciate this if you're the drawer of the chq ) that you can put a stop on a chq if it hasn't hit the a/c.
If you have paid someone by chq & then you're not happy you can notify your bank to put a stop on it. If the person you've paid has lodged that chq but in a different financial institution, it will take 1 day to go to the Central clearing, then 1 day to get to the notice of the account holders branch. This chq may be returned unpaid up to 4 o'clock of the following day. Hence a chq is not 100% clear or sure not to bounce for the 5 working days.

The cycle is shorter if it's all happening within the same bank but the computer system is set up not to clear funds for the 5 days as lots of lodgements are mixed anyway.

Most banks will allow you to draw on unclear funds once you have an a/c operating with them for a while & you're a/c has been in good order - in other words able to take the hit if a chq does bounce.

Cash from one institution to another takes a day or two to go through, but as these funds are done electronically they are automatically clear straight away. In the same bank it's generally same day value......you transfer from one a/c to another & it's instant. Even chq ldgs go in to an a/c straight away. The funds are actually in the a/c & earning interest if it's an interest bearing a/c, but still techincally not cleared.

I hope I explained this clearly....it's a bit difficult to clarify
 
Perplexed said:
Cash is cleared immediately.
There is only a Clearance Cycle when it comes to cheques & the time for this is 5 working days.
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Why do online banking bill payments (including ESB, ntl:, PTSB VISA etc.) take 5 days so (at least with PTSB Open24 anyway)?
 
Sorry. Not sure on that one. I've never checked what date my bill payments arrive. Just know they get there & that's good enough for me. No idea how long they take if you pay them in the Post Office either.
I know when I pay my Cr Card it's there next day but I assume that's because it's with the same institution.
If I transfer to my kids a/c's it's through instantly.
 
PTSB Open24 online banking bill payments even to PTSB VISA take 5 days. In the meantime the money is in in neither the source nor destination account. It's a bit odd.
 
ClubMan said:
Where the money has been withdrawn from the source account but has not yet appeared in the destination account then I presume that it resides in some financial institution's account and they benefit from any interest that it might earn.
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Correct. According to AIB a few years ago. I queried why it took 2 days to electronically transfer money from my old special savings account to my current account. I was told by the bank staff member that the money went into a holding account in the branch.
 
With the new system in BOI there is now Same Day Value. Perhaps AIB have updated too ?

BTW someone told me it takes up to 10 days to transfer money into a Rabobank a/c. Can this possibly be true ? He told me it has to go through AIB first
 
BTW someone told me it takes up to 10 days to transfer money into a Rabobank a/c. Can this possibly be true ? He told me it has to go through AIB first
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This is not the case. You can make a payment from your primary bank account, eg, AIB, BOI etc, directly to your RaboDirect Savings account. You can do this from your branch, telephone or internet banking. You only need to use your RaboDirect sort code and account number as you would if transferring funds to any bank. It certainly does not take 10 days. The clearing cycle for electronic transactions has been reduced to 2 working days. Within RaboDirect if you make an outward payment before 11.30 on Day 1 your funds will arrive in the external account on Day 2.

Some of the retail banks mistakenly tell their customers that the only way to make a payment to a RaboDirect account is by Same Day Money Transfer. You are not required to do this.

RaboDirect introduced a facility called the Rabo Money Mover a number of months ago. This system piggybacks off the Direct Debit system and allows customers to lodge money to their RaboDirect accounts from their primary bank VIA their RaboDirect secure account. This gets around the limits that some retail banks place on outward electronic transactions, eg, AIB limit customers to 5,000 per day. For more information please see [broken link removed]

Regards,
RaboDirect
 
Thanks for clearing that up as I was very surprised. I work for BOI & it was a customer who told me. I felt sure he was getting mixed up but he was so definite.

I like to know these facts, so thanks again.
 
Also, online transfers from AIB to Rabobank or Northern Rock are there the next day if made before lunchtime (the exact cutoff time is on the AIB website.).
 
One way it actually works for you is by paying MBNA credit card bills in the Post Office.
I used to pay my MBNA bills by cheque in my local Post Office. The payment would show up on my MBNA a/c online the next day but the funds wouldn't come out of my account until the cheque cleared a few days later! :)
(Don't know if it still works - got rid of them a while ago)
 
ClubMan said:
PTSB Open24 online banking bill payments even to PTSB VISA take 5 days. In the meantime the money is in in neither the source nor destination account. It's a bit odd.
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That may be a quirk of PTSB and their relationship with VISA. My BoI VISA bill is normally due for payment on the 24th of the month. I normally pay it from my BoI current account before 17:00 on the 23rd and the payment shows on my VISA bill with a date of the 24th.
 
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