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Why Money Transfer Between Bank Accounts Isn't Instant?

Transferring money from your savings to checking when you're running low on cash can land you in trouble if the bank ends up charging you an overdraft fee.

Transfer Money

Transferring money between your linked bank accounts should be hassle-free, especially if both accounts are from the same bank. Just like any other kind of deposit, internal transfers are credited to your account according to your bank's cutoff time. If you schedule yours too late, you could end up with an overdraft fee. Today, I'm sharing my own bank-transfer-gone-wrong story along with some tips on how to avoid having to cough up extra money for fees.

Timing is everything for internal transfers

Banks have specific guidelines in place regarding when deposits to your checking or savings account are processed. If you make a deposit after that day's cutoff time, it won't be processed until the end of the next business day. The times may vary based on whether you're depositing cash or a check and what method you use to make the deposit, i.e. at an ATM, with a teller or through your mobile device.

When you're moving money from one personal account to another at the same bank, the same rule applies, regarding the processing time. If you're transferring $100 from your savings to your checking account, your balances should reflect this right away, but when the transfer is completed depends on when you initiated it. Missing the cutoff time can put you in a tight spot if you're making a transfer to keep your account from going in the red.

You missed the cutoff time

I missed my bank's cutoff time, and because it was a Saturday when I initiated the transfer, I didn't see that I was charged with an overdraft until the following Monday. Image via Shutterstock

That's something I found out the hard way a few years ago when I was a BB&T customer. It was and still is my policy to keep just a few hundred dollars in my checking account and the rest of my money in savings, but that backfired one weekend when I unexpectedly ended up making a big purchase with my debit card.

I immediately logged in to my account through the mobile banking app to transfer money over to cover the transaction. My checking account already reflected a negative balance, but after a punching a few buttons, I was able to schedule a transfer from my savings account to cover it. It was something I'd done before without problems, so I assumed there wouldn't be one this time around. There was just one problem -- it was a Saturday, and it didn't occur to me that transactions initiated on the weekend wouldn't be processed until the next business day.

On Monday, my account balances reflected the transfer even though they hadn't actually been processed yet. When I logged in Tuesday morning, however, I saw that I'd been charged an overdraft fee because the transfer was credited after the purchase had cleared. Because I didn't have a clue about how deposit cutoff times worked, I added an extra $36 on to the cost of my purchase.
Tip: Link your checking and savings accounts to a budgeting app like Mint to receive email alerts when your balances are getting low.

Internal transfer cutoff times at top banks

Image via Shutterstock
Image via Shutterstock

The cutoff times on internal account transfers vary pretty widely from one bank to another. If you're not sure what your bank's policy is, you should be able to find it on their website or by reading over your deposit agreement. We've rounded up how the times compare at the top 10 banks below.

Internal Transfers

Bank Name Internal Transfer Cutoff Time
Bank of America 10:45 p.m. local time
BB&T 9:00 p.m. ET
Capital One 360 10:00 p.m. CT
Chase 11:00 p.m. ET
Citibank 10:30 p.m. ET
PNC Bank 10:00 p.m.
SunTrust 12:00 p.m.
TD Bank 11:00 p.m. ET
US Bank Varies based on type of account
Wells Fargo 8:00 p.m. PT

What I could have done to avoid the fee

Some banks can charge as many as six overdraft fees in a single day. Image via Flickr
Some banks can charge as many as six overdraft fees in a single day.

Image via Flickr

Obviously, not spending more money than I had in my account or hitting an ATM to withdraw the money from my savings would have been the best move but the concept of being charged an overdraft fee simply didn't cross my mind. These days, I'm much more stringent about keeping an eye on my balances, so I don't have to worry about paying more in fees than I need to.

Since my transfer mistake occurred before the optional overdraft protection era, my choices for getting around the fee were pretty limited. If I'd had the option to decline overdraft protection, then the debit transaction wouldn't have been allowed to go through in the first place. I wouldn't have been able to pay for my purchase, but I wouldn't have been charged an extra fee either.

One method of sidestepping the fee would have been to sign up for an overdraft line of credit and link it to my checking account. This is different from overdraft protection, which authorizes the bank to automatically transfer money from one account to another for a reduced fee any time your balance dips below zero. With an overdraft line of credit, you can borrow against it when you're short on cash without paying an overdraft fee. You will, however, pay interest on the balance until it's paid off.

I also could have avoided an overdraft fee if I'd gone with an online bank instead. Online banks were relatively new back then, but they were gaining steam thanks to their lower fees. Today, there are several online banks, including Capital One 360 and GoBank, that don't charge any overdraft fees at all. Online banks also tend to offer better interest rates on savings, and you can see how they compare on MyBankTracker savings account page.

Check out these new top banks that people are talking about:

Did you know? Federal Regulation D limits you to six transfers out of your savings or money market account each month. If you go over that limit, your bank can charge you a fee or convert your savings to a regular checking account.
Having to pay the price for my account transfer mistake kept me from repeating it, and hopefully, by sharing the details, I can help someone else to avoid it as well. If you've ever paid an overdraft fee after transferring funds between accounts, tell us about it in the comments below.

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Ask a Question

Wednesday, 10 Nov 2021 9:51 AM
<p>This seems illegal/wrong and you can argue with them. Talk to a supervisor, if that doesn't work, threaten to write the State Comptroller. You will have to follow through. I did this and eventually someone with the authority called me and told me they would credit the charge I was genuinely disputing. I recently got an overdraft, which was my first ever and asked them to courtesy waive it and they did. There's all kinds of people you can complain to for dodgy financial practices. Once the bank realises that you're serious (it only costs a postage stamp) they typically back off.</p>
Saturday, 13 Feb 2021 4:56 PM
<p>CapitalOne says transfers between internal accounts (ie savings to checking) should happen instantly. That was true for a while, but I've noticed recently they get held up on weekends... oddly until midnight the next day. Perhaps because I'm overseas? Regardless, they've really gone downhill in the last few years, tightening restrictions on customers at every turn. Would not recommend C1.</p>
Friday, 29 Jun 2018 8:57 PM
<p>The funny part is that when you buy something, the money does disappear from your account right then and there. But not when you want a wire transfer between banks. They play with your money. BS</p>
Thursday, 09 Nov 2017 1:00 PM
<p>You'd think they would fix this. Any online transfer done before the banks open in the morning will have the money posted within couple hours or by the end of the business day (unless this was done on a weekend or Holiday then it will post the next business day within two hours).</p>
Tuesday, 05 Sep 2017 8:31 PM
<p>Just a way to charge a fee. If they can take money from your account instantly then there is no reason they cant credit your account instantly. They are just trying to avoid paying interest and put you into higher risk of an overdraft.</p>
Monday, 15 May 2017 6:21 PM
<p>Here's an overdraft nightmare for you:</p><p>I have all my bills and budgeting set up automatically. When my husband gets paid, all the money is allocated into three separate accounts for spending, groceries, etc. This way we have a physical separation that keeps us from overspending. The only thing I can't automate is his direct deposit into our bill account, because we have our own accounts in our own names. I have to do that part manually.</p><p>Anyways, I logged into our account and went to transfer his paycheck into our bill account fifteen minutes after his deposit cleared. When I logged in, I discovered all my automatic transfers had cleared my bill account already, which had no money in it. I had been charged $105 in overdraft fees! They had made all my transfers on the Friday before payday for some reason, and he didn't get his deposit until Monday morning.</p><p>I called the bank to ask for a refund, since I was getting charged for not having enough money to transfer to myself, and they wouldn't do it! They said it was my fault for not setting up automatic transfers without a few days buffer. When I explained their system sent my transfers through early, they basically said deal with it, and change your schedule.</p><p>I was so angry! Is it even legal to charge someone an overdraft fee when the bank's schedule screws you? Especially when the debit is just a transfer to another account in your name?</p>
Friday, 10 Apr 2015 2:26 AM
<p>That's a great insight and something I hadn't considered. At the time this happened, I didn't use credit cards because I knew that spending on just the essentials and being able to pay the bill in full weren't things I had really perfected yet (obviously) so I didn't want to make my money problems worse by adding expensive debt in on top of the fees.</p><p>As you point out, if you're only charging what you need to cover your expenses and paying it off each month so there's no interest, a credit card is a better alternative than trying to constantly shuffle money back and forth between accounts. I wanted to share my story of how a transfer backfired because I think people assume that transfers are always instant when they're really not.</p>
Thursday, 09 Apr 2015 9:47 PM
<p>This is exactly why I advocate using a credit card for monthly purchases, with the *strong* caveat that it's paid off in full every month.</p><p>I use my credit card for my monthly expenses, and I try to have most recurring charges at the beginning of the statement cycle, so I know how much I have left in my budget before the end of the cycle. E.g. New cycle, $500 in bills (tithe, cable, cell phone, etc.), I have $200 more to spend this month. This allows me to check all charges before paying my bill, plus a few weeks to check that I'll have the money needed before the due date, or to schedule a funds transfer. It's also helpful for monthly and yearly summaries of where one is spending his/her money, and lastly, the rewards are a boost to my savings/travel planning.</p><p>People *do* need to make sure not to overspend, but I'd argue that an overdraft is an overspend anyway, and a far more expensive one (the effective APR of an overdraft is *highly likely* to be more than any credit card interest).</p><p>Disclosure: I work in the credit industry, but again, my comments are about using credit cards to the consumer's own benefit.</p>

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