One account pays 4.25% APY and another one of my accounts pays 4.65% or a 0.40% difference. Say I wanted to move $100,000 to the 4.65% account. $100K would earn $33 a month more at the higher rate. $100K earns about $12 a day so if you do ACH transfer, you be earning no interest for up to maybe 3 days during the transfer so it would take over a month to break even. What rate spreads would most people be motivated by to move money?
This is an automatically-generated Wiki post for this new topic. Any member can edit this post and use it as a summary of the topic’s highlights.
For me answer depends mostly on long term behavior of each account. Some banks may offer a better rate for a few weeks only before joining the pack. I’d only move if a bank offered consistently better rates. Also, I’d ask myself how sustainable some great rates offered are, as part of trying to forecast how long I expect them to last.
Also, I’d consider wire transfer (instead of ACH) so the money is transferred more rapidly if it does not cost more than the lost interest after taxes. A loss of about $10-12/day is often the break even point for ACH vs wire transfer.
In the end, rate leaders change almost monthly so I wouldn’t move money if the break even point is longer than a month.
Do ACH transfers still take this long? All my transfers are next business day, and I noticed they even started posting on a Saturday, so really the only time it could be a problem is if I initiate too late on a Friday and it doesn’t post til Monday.
Another way is to do a pull instead of push. I don’t think you lose any interest with a pull, since they should credit your target account on or before the day the money leaves the source.
1 Like
My Banking Direct aka Flagler usually does take that long. However I was pleasantly surprised this morning when transfers from Poppy at 4.25% to Roger at 4.65% that I initiated from both banks yesterday were in my account already. Poppy did actually call me yesterday to confirm that I made the transfer. The downside to these quick ach transfers are low limits. $5-10K a day and $25K a month.
I’ve still seen 1-2 days delays with pulls for banks who essentially don’t credit you immediately for money transferred (I guess until they’re sure the transfer completes).
But some banks/brokers give you credit immediately (effectively before the transfer has completed) so one take home is that the answer may depend on the two banks involved in the transfer and how long it actually takes.
1 Like