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.

Image via Shutterstock
Your bank’s cutoff time determines when transactions will stop being processed. Image via Shutterstock

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, in terms of 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 actually 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.

I 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.

Bank NameInternal Transfer Cutoff Time
Bank of America10:45 p.m. local time
BB&T9:00 p.m. ET
Capital One 36010:00 p.m. CT
Chase11:00 p.m. ET
Citibank10:30 p.m. ET
PNC Bank10:00 p.m.
SunTrust12:00 p.m.
TD Bank11:00 p.m. ET
US Bank Varies based on type of account
Wells Fargo8:00 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 prior to 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’s savings account page.

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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  • SD

    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.

    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.

    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).

    Disclosure: I work in the credit industry, but again, my comments are about using credit cards to the consumer’s own benefit.

    • Rebecca

      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.

      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.

  • DANonamous

    And dont forget CitiBank, 5/3 and PNC now have ATMs that read in and deliver out cash (like a vending machine) in down to $1 increments, no more of this 20 dollar take out only limit crap! The PNC machines also will scan in personal and business checks! Funds available for cash on 2nd business day, available to charge against or check against SAME DAY! (Using a teller for checks at PNC gives you $100 available same day, 200 next day then remainder 2nd business day). Some PNC branches are open Lobby Sundays!

    Cash in and out are Notes-appendable! I put in 23.52 “for sister’s birthday gift”, took out 34.00 “for older brother’s house warming”, etc.! Like a memo line for cash.