mworks
join:2006-06-13
Faison, NC | reply to Sofa King
Re: happens all the time- 100's of times a day It isn't about the speed that the system can handle the transaction, it is about the greed typical of banking.
If I owe you $100 and I can manage to hold that money for a few extra days I can gain interest off loaning it out or investing it, even if it is just a few days. I might only make 3 cents but do it enough and it adds up.
A good example of this is social security. Banks get the funds around the 28th of the month but do not post it to accounts till the 3rd of the next month. They wait until they have no other choice but to post it due to federal laws, until then they have 3-5 days to use that money and gain interest. |
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| The banks may receive the funds from an ACH for Social Security earlier than the 3rd of the month but the ACH arrives with a date that it is to be credited to the account. If they post it early, they are not following the rules of a dated ACH.
In this case, it is Social Security sending the money early, they could easily do it on the 3rd of the month but with the volume of transactions they have to process they typically do it over the course of a couple days. |
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 danclan
join:2005-11-01
Midlothian, VA | Its called float the bank, either receiving or sending is using the funds to earn overnight interest before paying out. This is pretty common but the funds have been transferred within hours and same day at the very least. |
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elray
join:2000-12-16
Santa Monica, CA | Float hasn't existed for many years.
Years ago, the overnight rate was 7%, today its 0.16% - $100 on deposit yields 16 cents a year - you'd need $2200 to earn a penny overnight - no, the aggregate doesn't amount to much of anything. |
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danclan
join:2005-11-01
Midlothian, VA | said by elray:Float hasn't existed for many years.
Years ago, the overnight rate was 7%, today its 0.16% - $100 on deposit yields 16 cents a year - you'd need $2200 to earn a penny overnight - no, the aggregate doesn't amount to much of anything.
Float still exists and is used by banks every day. It has not gone away. It's decreased for the consumer due to instant transfer of funds but not for the banks. Overnight loans are still used and will be used for decades to come. |
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