Is HBSC Taking Advantage Of The Float? An Experiment

So apparently from the comments on my last post, I am wrong about all banks taking 2 business days to do a transfer. I thought taking the money out on a Monday and depositing it on Wednesday was about normal for online savings accounts? All this time I’ve never paid attention. So it’s time to set up more experiments. Hey, my classes haven’t started yet, so why not.

I’m going to set up the following transfers on 9-10am Pacific on Monday, and see how long they take. The bolded bank is the one initiating the ACH push or pull.

HSBC -> Presidential Checking
HSBC Emigrant Direct -> Presidential
Emigrant Direct Capital One 360 -> Presidential
Capital One 360 VirtualBank -> Presidential
VirtualBank E*Trade Bank -> Presidential
E*Trade Bank CashEdge as the backend to their funds transfer service. This way we can see if the hold times is solely an HSBC thing, or a CashEdge-wide occurrence.

Comments

  1. You forgot that Monday is a bank holiday and
    also did not include paypal in your test.
    Paypal is pretty good in APY and ACH.

  2. You did not include any major banks either like Citibank, Bank of America, Chase, Wells Fargo etc.

    Also a much easier way to test it would have set up a push and pull from HSBC to Emigrant Direct, VirtualBank, Presidential, and E*Trade Bank. Then do a push and pull from all the above banks to HSBC.

    You will be see that HSBC can post your money same day as long as you dont use HSBC own ACH system.

    Personally I dont care if the problem is with HSBC or cashedge. HSBC should not be using Cashedge is cashedge is playing these types of game and I personally hold HSBC responsible.

    Just so you know goto Fatwallet.com there a huge thread about this and other people have already tested it with same results you will see more than likely.

    Most banks take 1-2 day before they debit you account on a push but once it debited it credited on there other end same day so you are always collecting interest somewhere on your funds. Same is true for a pull.

    Some banks like USAA and Fidelity will credit you account right away and wont pull funds for 3 days so will get interest in both places for 3 days except when you push money back out you will loose interest for 3 days which is ok as it really evens out.

  3. I actually chose Monday because it IS a holiday, otherwise I would have chose to schedule it on Sunday. I want the transfer to initiate on the first business weekday.

    I don’t trust PayPal, and so I don’t use it. Real banks should not be able to freeze access to your funds at their whim.

    I don’t see why it would matter to use Presidential vs. BoA, Chase, etc. I don’t have an HSBC checking account so I can’t link it to VirtualBank, ING, and Emigrant as they all require voided checks now. I may end up opening one though, if that’s what it takes. That HSBC thread is loooong, but I’ll dig through it.

  4. Only reason why I said try a real bank was because HSBC is a real international bank. They are largest bank in HK China, They are 2nd largest bank in UK and 2nd largest bank in world after Citibank and not some fly by night internet only bank. HSBC should be held to the same standard as Citibank, Bank of America, Chase, Wells Fargo, Wachovia etc not really given slack because Yahoo or Paypal who are not banks do it so it ok that HSBC does it too.

  5. HSBC is also the 2nd largest bank in NYC after Citibank as they have more branches than Chase now even.

  6. I think this is a good discussion. After slogging through that FW thread, here are my impressions:

    1) CashEdge provides the backend, and the *Bank* using it can choose to offer next-day funds availability, or a 3-day hold. Many banks choose to make the 3-day option “free”, while charging for the next-day option.

    Link advertising this such option

    For example, ACH out of Bank of America, which also uses CashEdge, is $3 for 3-day transfer, and $10 for next-day transfer.

    To me, it is still not clear if anyone is making money off the float. The common sense answer is yes. I can’t tell if it is CashEdge or HSBC keeping the money though.

    2) I agree, HSBC should be scrutinized for their apparent choice to do this. I don’t think it’s cheating, as they do disclose their schedule, but it is a backhanded way of making money off this service. In the end, I think we just have to accept it as part of their account structure. If you use their system, you lose 2-3 days of interest. People put off by this will just have to initiate elsewhere and open up one of their checking accounts.

  7. Great site!

    I’ve read through some of your entries and have enjoyed the content. Keep up the great work!

    Joe Park

  8. I work for Bank of America you are sadly mistaken. Bank of America ACH service works like this.

    3 day ACH service money sent today will be debit from your account in 1-3 bussiness day and credited to other account same day. No one keeps the float.we batch send all the ach transfers every 2-3 days.

    Our next day service is not batch send but we only send your transfer by itself so money is debited from your account and credited at the other end same day.

    We dont keep the float on your money or allow a vendor to do same.

    And our bill pay works same way we dont debit your account till either the check we mailed out is cashed or on the day we send out the ACH E-check for an EFF payment and the payee will recieve that ACH transfer the same day we debit your account.

  9. Interesting, so it takes 3 days but only because BofA waits for that long? Is it really cheaper for them to batch ACH transfers, or are they just trying to charge more for convenience? Isn’t it all electronic anyways? Nothing wrong with that, just curious.

    Alternatively, as a bank worker do you know of banks that DO keep the float?

    Also, I found the following text in HSBC’s Terms & Conditions after logging in. Bolding is mine.

    …You authorize us to select any means to execute your Bank to Bank Transfer instructions. You understand that to effect your Bank to Bank Transfer instruction we utilize the Automated Clearing House (ACH), using applicable ACH Rules, we debit one of your Accounts and credit another of your Accounts. Once your Account has been debited, we credit our service provider’s transfer account at the service provider’s clearing bank. After our service provider and/or its clearing bank are reasonably certain that the debit will not be returned (in most cases this is usually between 3-4 banking days), our service provider will credit your Account. The sole purpose for our service provider’s transfer account is to complete your Bank to Bank Transfer requests and for performing the services within the scope of this Agreement. The service provider earns no interest on the funds in the transfer account. If the debit side fails or is returned for any reason and the credit side has been released and cannot be collected, you authorize our service provider to collect from the Account to which the credit side of the funds transfer was sent. We reserve the right to resubmit a debit, or a portion of the debit, in the event of an insufficient or uncollected funds return and if we cannot collect the amount credited…

    I am assuming the service provider is CashEdge. So it’s just for security reasons? The plot thickens.

  10. I am not the person who made the rules. I just work in web developement team. We maintain and update the web pages and the back end software.

    I was told the reason we do batch transfers is because it cheaper for us and our provider to process them. No it can take up to 3 days. For example we try to do batch process when ever we have 1000 transfer to process. And you could be lucky make the transfer today and tommorow we do your transfer because as of today we had 1000+ pending transfers already. Now assume we made a transfer today we might not hit our limit of 1K with in 3 days then our next batch goes out anyways in 3 days and the timer starts all over.

    Just so you know we do batch transfer for all EFT bill payments. For example we might send American Express a ACH tranfer today for $20K that transfer is really for 100 people payments. We send Amex an e-report today showing what account paid what amount so they know who to post it. That file is in a format called bif so the correct accounts get credited to correct accounts. That format is auto imported into there system. All payee on our bill pay system use this format to accept EFT payment. The ones who do not use this system get a check mailed out. Like your pool man for example.

  11. That is most retard thing I have ever heard of in HSBC TOS. HSBC can not verify to Cashedge that the funds are there? So Cashedge needs to hold the funds in there so called “no interest bearing account” for 3-4 days so the transfer clears.

    “If the debit side fails or is returned for any reason and the credit side has been released and cannot be collected, you authorize our service provider to collect from the Account to which the credit side of the funds transfer was sent.”

    If god forbid they make a mistake and post the funds in your recieving account and debiting account did not have enough funds they have a right to debit the recieving account anyways. So why not just post the money into account right away and debit the money out of the other account if you dont have funds in the debit account. This is dumbest thing ever.

  12. Paypal would not withhold your money if you use
    it just for transferring funds from one bank to another.
    I don’t use paypal for making any purchases.

  13. “And our bill pay works same way we dont debit your account till either the check we mailed out is cashed or on the day we send out the ACH E-check for an EFF payment and the payee will recieve that ACH transfer the same day we debit your account.”

    Mike, I appreciate your insight to these things, please continue to comment. But I must say that this is not the case for me on this last part. My account is debited the day the BillPay check is sent out, *not* when it is cashed. I have sent checks to numerous people, including one this week, and they were all debited immediately from mey account.

  14. I just opened an online savings account with HSBC, and tried transfering some funds from my GMAC account over by pushing the funds using their ACH transfer option, which is not CashEdge. The other part of the transfer was initiated from the HSBC side using CashEdge. In both cases the funds were held up for 3 days. GMAC claims that they sent the funds on the date the money was debited from their account. My conclusion is that HSBC is definitely taking the float. It’s really very simple, if I’m denied interest that otherwise would be paid to me without the 3 day hold, then HSBC profited from not giving it to me. In effect, yes of course HSBC is keeping the float, and because I feel that this whole thing is misleading, I am leaving HSBC. This is the only bank I’ve delt with that does this sort of thing. The whole concept of the online savings account is a clever scam by them. By not allowing the customer to have check writing, the customer is forced to use the offending ACH transactions to move money around. The interest lost is more than the extra yield that HSBC is paying on the account. My reccomendation for those people that have high dollar amounts at HSBC, is for them to leave the money in place until 30 April 06 when the promo ends, then wire tranfer the money out for $30.00.

  15. Let me also say that the most clever thing you can do to beat HSBC is to make all deposits by check, and only withdrawl the entire amount down to $1.00 by wire transfer (their outgoing wire fee is $30.00). Also remember that they have an early close out fee of $25.00, so just take the balance down to $1.00 and leave these jerks. By stealing the float on 100K for 4 days as an example, HSBC can steal about $51.51 in interest at their current promo rate. As Scotty used to say, “Fool me once shame on you, fool me twice, shame on me”.

  16. HSBC is very slow with ACH.

    On Monday 2/13 I initiated a transfer from my checking to HSBC. The money was withdrawn from my checking on Tuesday 2/14.

    The money was deposited on Thursday 2/16. But the transfer was not marked complete until 2/17.

    The total is 4 business days. That means a round trip deposit and withdrawl will take 10 calendar days because there will always be a weekend in between.

    I also have an account with First Fed Direct of California. If you make a transfer, either direction, late in the afternoon the money will be in the account the next morning.

    Same usually is true for Emigrant Direct and ING, but sometimes they may take 2 business days.

    Other considerations:

    First Fed Direct of CA does not put any hold on the money. So you can do a deposit and withdrawl in just 2 days.

    ING and Emigrant freeze access to new deposits for 5 business days.

    HSBC does not freeze access, but they do take way too long to complete a transfer, so you lose interest in the interim.

    ING is 3.8% but with new money at 4.75 until 4/15
    Emigrant Direct is 4.25%
    First Fed is 4.25%
    HSBC is 4.8% until 4/30 on all money.

    It will be interesting to see what will happen in April with HSBC and ING.

    I like ING because you can open up CDs easily all within the same customer ID, the CDs are competitive but not the highest available. Except for taking advantage of their 4.75% deal, I usually leave one penny in the savings just to keep it open.

    First Fed was the easiest to set up, no mailing of password or userid. I did need help over the phone though initially to set it up.

    The initial transfer took 3 days. There is no trial deposit. The external tranfer however has no confirmation, once you do it, you can’t go back and review or cancel what you did. You need to call them.

    Emigrant Direct pissed me off because they waited so long to raise their rate to 4.25% – Also they lost one of my transers over New Years, so I don’t trust them in a crunch.

  17. Christian says:

    Bad HSBC experience. I had a large sum of money at HSBC bank that I needed to place into my checking account for a house purchase. I needed to transfer $200,000 so I figured I start moving money 11 days before with the Bank to Bank transfer since HSBC only allows $100,000 at a time and each transfer has to clean before doing the next one. The first transfer was done on a Monday after hours, so it went out on the next day. I finally saw my money in my account on Friday, but when I went to HSBC to do the second transfer, I couldn’t because HSBC still showed the first transfer as pending. So on Sunday, I scheduled the second transfer for Monday. Well come Tuesday, I check my account and find that HSBC did not send it out until Tuesday. This sets me back 1 day. So I call the customed service and end up talking to a back office employee in India, who was pleasent but really could not do anything for me. But she did assure me that I would see the money Friday morning. Guess what. It’s Thursday night and I called my bank and they say they do not have the ACH on schedule for Friday. In other words a whole week has gone by without my money and now I will have to push back closing on my home.

    If you need to move money quickly DO NOT USE HSBC DIRECT!!!!!!!!!!!!

  18. I’ve got online savings account with HSBC Direct and Emigrant Direct. Consistently, HSBC Direct will float incoming transfers for 2 or 3 days. The money leaves my primary bank and goes into limbo for that time. Transfers done with Emigrant Direct are reflected in my balance the moment the money is deducted from my primary bank.

    The difference between the two is HSBC Direct opts to not give me interest on the money while they wait for it to fully clear. Emigrant, on the other hand, simply markets the money as “not available for withdrawl” but lets me earn interest on it while it fully clears.

    I find Emigrant’s handling of fund transfers to be much better and much faster. I’ve tested this by doing transfers at the exact same time.

    I do like the HSBC Direct gives me an ATM card (Emigrant doesn’t), but all in Emigrant Direct is faster in handling transfers than HSBC Direct.

  19. I need help to understand this: I have a credit union wescom who has a feature to be able to transfer from and to other banks. I initiated a transfer at the wescom web sit to transfer money from another bank (usbank) into my credit union (wescom’s) account. I put in a day of july 18. on july 19 I initiated another transfer to the same bank, however, this time it was to send money FROM wescom credit union to USbank. The transfer to wescom from US bank made a day later took only 24 hours to show up in my account. but the transfer from USbank to wescom it taking all of three days. The odd thing is usbank has debited the money already and yet it is not on the other in at wescom. The only explaination I got was that they can take up to three days. I couldnt get them to give me an answer why the money from USbank to them, wescom credit union took merely a day and yet reversing the transfer to go from usbank to wescom has yet to post to my account even though I am out the founds in usbank.
    It looks to me they are parking my money for interest. It sures makes me pisssed off about it. I have a lot of money in limbo now where it is not to exist in either account. What the heck is going on?

  20. Can someone define what is or how a float (ie: 6 day float) is determined? Thank you.

  21. I have a payment sent to me each month from someone’s Bank Of America account via ACH and they debit this person’s acct that very day, yet it takes 7-10 business days (sometimes more) to get the credit into my account. How is this, since you say they are supposed credit the receiving bank that day and wait 1-3 days before debiting the sender’s account? It is ridiculous that it takes me 7-10 business days to receive an ACH payment and causes me a lot of financial problems. It’s floating a long time and sometimes, it never makes it.

  22. Bank Transfers says:

    That’s a good experiement. thanks for sharing it with us!

    -Jack

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