When you make an online payment and the $ leaves your account but doesn't appear with the payee, where is it?

Question

what is this place that it sits in for 2-3 days? is it earning interest for the banks? I think it's rather annoying that this practice is regularly happening to all of us. I might as well keep writing checks.

Answer 1

The banks use it whilst in 'limbo' to play the stock markets themselves. You're spot on that they'll be earning the interest for themselves........ all they need is a dollar from everyone with a million customers and well, you do the math :)

Answer 2

I wrote a $1,500 check to a credit card company and dropped it off at their front desk (service center was in my city).

They claimed it came in a week late ($29.95 please)

I showed them where it cleared my bank 2 daze after the drop and 5 before it was late. They grudgingly refunded my fee.

Now when I send it electronically - one posts next day - one posts same day. and I saved postage and gas (cause you DON'T put these in your unsecured mailbox in front of your house!)

all the best

Answer 3

No its not eearning interest but the funds are debited from your account and placed on hold until the merchant's bank actually contacts your bank and the funds are released.

The merchant actually has up to 5 business days to collect the funds or the funds will be credited back to your account but they have up to a year to reclaim those funds