The US banking industry is too fractured to be able to provide something like this, yet.

Not for regular folks, no.

Employers frequently make direct deposits for salaries, and many banks have a bill paying service that can do electronic transfers to pay certain large companies, like, for example, DirecTV, credit card companies, the power company, etc., but not, for example, your local doctor or the exterminator. (Though those services will generally send paper checks to such recipients in the mail.)

But the only electronic transfers that individuals can do between each other is generally known as a Wire Transfer, it's routed through the Federal Reserve Bank, it generally takes like a week, and it's pricey. My current bank charges $6, and that is super cheap. My previous bank charged something like $40 for this service and required that you fill out forms in person at a bank branch.

Whoa! I guess we're really spoiled!

Not totally true. Some banks do not charge for outgoing or incoming ACH transfers and allow them to be originated from personal accounts. Here's an [OLD] list. Check with your bank to know for sure.

US and even Canadian banks are at least 10 years behind most European banks in most ways. Except perhaps sub-prime mortgages for the US banks.

I forgot about ACH.


Why — oh why! — couldn't it have been an organization and not an association?

What is the difference?

As an association, it's NACHA. As an organization, it would have been NACHO.

Thanks Bitt

Corollary to the discussion in this thread...

Situation:

- Communal household.

- Rent must be paid to the landlord via a single check (it's in the rental agreement), and rent check must arrive in the hands of the landlord by the first of the month (no grace period, late fees assessed immediately). I feel that this is unreasonable, but there's nothing I can do about that part of it.

- Household has established a communal bank account at Wells Fargo for paying rent, bills, and groceries. I manage this account.

- My preference is to pay the landlord and the household bills via the online Bill Pay account at Wells Fargo.

- Members of household all get paid on the first and the 15th of each month.

- Members of household transfer certain predefined amounts of money into the communal account after getting paid. Minor fluctuations in the bills and groceries are covered by me and/or small amounts of budget padding.

- All bills (except for the unreasonable rent restrictions) are due on, or very close to, the appropriate time period following the first and the 15th of each month. For example, due around the 10th or the 25th or so, giving me time to pay them after receiving the transfers following everyone's first/15th paychecks. Rent for the following month is paid out of the prior month's 15th-of-month transfers, to compensate for the unreasonable rent payment restrictions.

So far so good. There's only one hitch in all of this...

All members of the household bank with Wells Fargo except for one member, who banks with BofA. Everyone else can do instant transfers into the household account except for this person.

We need to find a method for the BofA person to get their money into the household account twice a month, that's going to give us the best balance of timeliness versus ease-of-transaction. Anyone have any ideas?

Here's what we've tried so far:

- BofA member writes a physical check and deposits it into a Wells Fargo ATM using the household account's ATM card. This works, however it can only happen on the 16th or later because the BofA member's direct-deposit paycheck doesn't hit their account until EOD on the 15th. Then the deposit takes a few days to clear (especially if payday falls on a Friday). And besides, physically traveling to an ATM to do the deposit is a hassle twice a month, and therefore severely increases the possibility of procrastination (we've already experienced that one). This is, so far, the fastest way we've found, yet the least convenient.

- BofA member uses their online Bill Pay feature, with the Wells Fargo household account as the payee. I'm skeptical, but I'm told it *will* work, as the BofA member has done the same kind of thing before. We just tried it for the first time, but it's been several days and I haven't seen it hit the household account yet. If it does, in fact, end up working, it would be the most convenient method for everyone, but it's not timely enough to cover the billpays and rent as quickly as I'd like it to.

- Asking the banker who set up the household account. He didn't seem to have any ideas other than the physical check deposit.


Things we haven't tried yet:

- Paypal. That's got a clearance-time, too, although perhaps the number of days of clearance-time would not be so bad compared to other methods. And does it have a fee or a limit? What's the fee/limit if so? We'd have to either set up a paypal account for the household, or have the money sent to my personal account, I'd wait for it to clear, then I do an instant transfer into the household account. Overall, not the most convenient thing, but certainly more convenient than a physical trip to the ATM.

Things we're *not* going to try:

- BofA member changing banks. There is too much going on there to make the shift, it would be a disaster for their accounts.

- Pre-loading the funds any further than we already are. We're all pretty strapped at the moment.

- Wire transfers, or any other method that involves fees/charges.

- Splitting up the BofA member's direct-deposits so that they go to different places. That would be the ultimate solution, as it would be the most convenient as well as the timeliest. Unfortunately, there was a technical reason this wasn't possible, and I don't remember what that reason was at the moment. I'm thinking of re-investigating it, though, now that I've brought it up and I've realized exactly how convenient it would be.


In the meantime, anyone else got any ideas?

First, I would be surprised if the BillPay from the BoA individual account to the WF individual account didn't show up as a check in your mailbox. How was the WF account specified in the BoA BillPay?

Second, there is a faster method than your "fast/inconvenient" method. Instead of depositing a check, get cash from BoA and deposit cash in WF. It's more inconvenient, but there's no clearing time for cash.

Your best bet remains split direct deposit. There is no publicly accessible immediate (or even less-than-several-days) funds transfer system in the US.

The only other thing I can think of is a credit card that has associated checks. If you get a credit card that doesn't start charging interest until the next billing period comes around, it could function as your free elastic buffer.

The direct deposit would definitely be the easiest way. Does the employer not allow multiple direct deposit accounts (ours is limited to five accounts I think it is)?

Tony, I feel your pain. When I was renting in grad school, I had an automatic (Quicken CheckFree) payment mailed to my landlord every month and I didn't worry about it. Then, two years ago when I was renting a place while on sabbatical, my landlord insisted that I deposit a check at her bank directly. She wouldn't take a check in the mail. At the time, I couldn't find any automatic way of doing the payments. (Grumble. You'd think a landlord with so many properties would have some sort of service to manage automated payments, but no.)

If I was in your situation, where BofA allows for these sorts of instant transfers, I'd have the roommate get a BofA account for the sole purpose of being a landing pad for the money which would then allow for the automated transfer. Then the roommate arranges for a chunk of their paycheck to go directly to BofA (or, alternately, keeps a bigger chunk of cash in the BofA account and writes occasional checks). The #1 downside is having a second minimum balance for your roommate to deal with. This requires keeping the cash around, and then it's also earning less interest than you might prefer. A variant on the situation is to have some of the paycheck money go directly into the house shared account without the personal BofA account in the middle. This would work well for fixed/repeating costs (rent) but would complicate life for variable expenses (power, water), requiring more complex bookkeeping and the house occasionally either asking for money or giving a rebate.

If your roommate cannot split the paycheck, then you need to sort out whether the bank can do it (no doubt, with obnoxious fees). A brokerage trading account might also be willing to receive a direct deposit and route it multiple ways, possibly with lower fees. Never looked into that myself. I will point out that my broker does do free electronic bank transfers in and out of my core trading account. I use this as an easy way to route money between two different bank accounts (my relatively unused credit union account and my main bank).

When you draw cash from a credit card, whether via ATM or by these "convenience checks," it begins accruing interest immediately. Otherwise, you'd be able to use your credit card to buy other investments and pocket the profits. That's clearly not allowed.

(Never mind that, when banks place holds on big deposits or otherwise slow down the flow of money, that's exactly what they're doing to you, effectively borrowing your money from you without paying you any interest.)

Yes, this was my skepticism as well. However, I'm told that when it's spec'd the way we spec'd it (destination address of Wells Fargo Bank, account number of the household account number), then the bank receives it and deposits it to the specified account. Hopefully in the next couple of days we'll see the funds hit, and have this confirmed.



In my past experience, placing cash into a deposit envelope at an ATM ends up with the same, or close to the same, clearing-time. The back-end system of gathering the ATM envelopes and processing their contents doesn't distinguish between checks and money until farther down the line. I remember once putting hundreds of cash dollars into an ATM on a Friday night and being unable to access those funds until mid-week the following week. So the only way to get an ATM deposit to happen instantly is to skip the ATM and deposit at a teller window. Which is even more inconvenient than going to an ATM.



Yeah, I'm hoping that we can work out a split direct deposit. I need to find out why it wasn't possible the first time we investigated it, and investigate it harder.

Also still considering PayPal.

Lots of replies and I scanned them but only the first couple in detail.

Easiest from my perspective: the BofA person deposits cash or cheque into the Wells account as you've mentioned.

Get a suitable overdraft protection on your Wells account. $500 to $1000 should easily cover that person's portion of the rent.

Depositing cash at an ATM is the same as cheque for the actual deposit day, but if it's an ATM at a bank, they should remove the automatic hold the very next business day for cash. Instead of like 5 or 6 for a cheque.

If you have overdraft protection on that account, the hold won't matter. Or shouldn't unless your bank uses some sketchy practices.

Direct deposit may not work if the person is not named on the WF account, this is the case with my employer. Given that you refer to it as the communal bank account this may not apply.

You mean like charging automatic transfer fees, like every bank in the US does?

Fees for automatic transfers? Yeah, that's pretty slimy. I mean, all the banks here charge per debit, but they don't charge additional for auto transfers. And I believe most waive the fee when you're debiting and crediting accounts at the same bank in the form of a transfer (as opposed to a manual withdrawal and then a deposit).

No, I mean overdraft transfers. For Wachovia (east-coast Wells Fargo) and Bank of America, it's $10. For my bank, (North Carolina State Employees' Credit Union), it's $0.50. (By the way, the NSF fees are $22, $35, and $12, respectively.)

Few banks in the US charge per-debit, though.

Oh. Overdraft protection (that I was recommending) doesn't involve transfers. It's credit available on your bank account, allowing your balance to drop below 0 without bouncing the cheque.

As long as the BoA guy makes his deposit before the cheque clears, the account will not drop below 0 and you'll have by-passed the ATM hold. If one day there's some slip-up and it does, there won't be an NSF charge from the bank nor an angry landlord with his own charges.

In the US, it usually does. Generally (though not always), it's implemented by being tied into another account (which might be a credit account), and if the bank receives a check for which you have insufficient funds, they automatically transfer money from the other account and charge a fee on top of that, which I detailed in my last post.

And there was me thinking y'all would run out of stuff to fix once you'd fixed healthcare.

Peter

Oh, don't worry. They're working on it at the same time.

The Card Game

I heard somewhere that while the banking industry is back to making a profit after the federal bailouts, the amount of their profit that is due to banking fees is well over 100%.

ROFL

Yeah, it's pretty slimy. When your banker sets up the bank account, he's careful to make sure to set up that "Overdraft Protection" as he calls it. Somehow I still get that fee if I bust the threshold and it has to pull 20 bucks from my savings account to cover it. Grr.

I was surprised to find my little credit union is also getting in on the auto transfer fee crap now. They have historically been decent, but it seems everyone is shaking down their customers in the US for more money.

At least they still refund up to $10 per month in ATM fees charged by other banks. One sad part about my ATM visits is that it's becoming cheeper for me to go use one at a gas station then it is to go to most bank owned ATMs.

My credit union is the second largest credit union in the country. If it were a bank, it would be the 5th largest bank in the country, very close in value to Wells Fargo, behind only BoA, Chase, Citi, and Wells Fargo. (Edit: Uh, nevermind. It's not clear from that data, but I was off by a factor of 1000. Still, it's pretty big.)

Bank Data
Credit Union Data

Like I said, they charge 50¢. Sadly, their total income from fees is still just over $50M, but that's less than $33 a year per member, and they charge a $1 per month fee for their (interest-bearing) checking account, so call it $21 in fees per member per year.

They're also very friendly, very helpful, don't sell off their mortgages at all, etc. I also think they don't do much, if any, speculative investing. It's the best financial institution I've ever done business with. I wonder why other banks don't follow their lead.

I typically go to the closest grocery, buy a pack of gum or a 12-pack of Dr. Pepper, use my ATM card, and make an additional withdrawal then. No fees.

I have never been charged a fee of any kind for any service by my bank, a small, locally owned bank in Fairbanks, Alaska. Those services include checking, savings, wire transfers to foreign countries, money orders, automatic monthly bill pay, electronic banking, overdraft protection, and a host of other services I don't remember or never needed to use. (I have used all of the services listed above)

My overdraft protection is not free, but there is no fee involved. Instead, I have a revolving line of credit so if I go into overdraft, the bank just covers the overdraft and I pay about 8% annual interest on the loan which is normally paid back within a few days so actual expense is trivial.

By contrast, I have an account here in California, whose sole purpose is to have a debit card I can use at Costco (they don't take my Visa card there) and the fees are horrific. They charge me about $8.00 a month for the "privilege" of having a savings account there that pays about half a percent annual interest, they charged me a fortune for a book of 25 checks (none of which I have ever used) and I am fully expecting them to put NY Subway style turnstiles at the entrance to the bank so you have to pay to get into the lobby.

I'll keep my Alaska bank account for as long as they'll have me. The Bank of America account is going away real soon.

tanstaafl.

I used to do that too now I have been just using the debit card to pay for everything. It has been quicker to use that to pay 1.09 for a pop than cash since most places don't even make you sign.