TWiki . Edumacation . WhenShouldYouWriteACheckToAvoidLostInterest	TWiki . { Main | Edumacation | TWiki | Test }
	Edumacation . { Home | Users | Changes | Search | Go }

Let's assume you have some money in an interest-bearing account on which you do have check-writing privileges, and you want to transfer that money to another interest-bearing account.

You're presented with the following options:

• The first bank will cut you a cashier's check, which you can present to the second bank.
• The first bank will transfer the funds to the second bank using an automated clearing house transaction (ACH).
• The first bank will transfer the funds to the second bank using a wire transfer.
• You can write a check on the account at the first bank and deposit it at the second bank.

A cashier's check in this situation doesn't make much sense... the amount of the check will be immediately deducted from your account, and it won't be credited to your other account until they receive the check, and even then, some banks may delay paying you interest on it for a couple of days anyway.

An ACH transfer is better, if that means you avoid the mail delay, but it still means that the amount is deducted from your account at the first bank sooner than it needs to be, even though you may not get credited for that amount at the second bank for a couple of days.

Wire transfers can make sense, if the amount involved is large enough. But they're more likely to be useful when your only alternatives are a cashier's check or an ACH transfer.

Writing a check on your account at the first bank, and presenting it for deposit at the second bank is often going to minimize your lost interest. Even if you have to mail the check in, it doesn't get deducted from the account at the first bank until sometime after the second bank processes it. By that time, it's at least been posted to your account. Even if they hold it for a couple of days before you earn interest, this will reduce the amount of time that your money is not earning interest.

In most cases, this is probably going to cut the "limbo" time down to 1 business day, and your out-of-pocket cost is only for the postage stamp. Keep in mind, if you have a money market account with check-writing privileges, you can only do this 3 times a month before most banks start to sock you with extra fees.

Can you actually avoid all lost interest when you transfer funds? If you're transferring from an account you have checkwriting privileges on, maybe so. It really depends on the policy of the bank where you're depositing the check as to how quckly they let you earn interest on deposited funds. Some banks will give you credit immediately, in which case, you could actually be earning interest on the same funds in two places at once! So pay no attention to that man at http://bankrate.com, he'd rather give you the easy answer than the right one.

Topic WhenShouldYouWriteACheckToAvoidLostInterest . { Edit | Ref-By | Attach | Diffs | r1.2 | > | r1.1 }

You must register before editing pages or using other extended features on this TWiki system.

Revision r1.2 - 30 Oct 2006 - 00:22 by EliMantel  Privacy Policy

Copyright © 2000-2005 by the contributing authors. All material on this collaboration tool is the property of the contributing authors. Collect email addresses here. Ideas, requests, problems regarding TWiki? Send feedback.