Q: I have an online savings account linked to a checking account at a traditional big bank. I like the high interest rate from the online savings account, but I always have to remember it takes several days for transfers between the two banks to take effect. With today's fancy technology, why does an electronic funds transfer between institutions still take several days?
A: It's a good question, and ideally those transfers would be more seamless. However, it's important to remember that at the front and back end of any electronic transfer, there is usually some amount of human involvement. This can slow the process down, but it can also make transfer procedures more secure. You only have to look at the "flash crash" on Wall Street earlier this year to see what can happen if technology is allowed to operate without some degree of human oversight.
You may already have looked into this, but with online banks expanding their services, and with traditional banks expanding their online capabilities, it may be possible that you could find a bank which offers both high-interest savings accounts and traditional checking. It's at least worth a look, and banking with a single institution would make transfers between checking and savings more fluid.
If you can't find a single bank to fill both roles, the one consolation (though it is a hollow one, at best) is that with today's low bank rates, it shouldn't cost you much to make transfers from savings to checking with more lead time, and/or keep a larger balance in your checking account -- most likely, you'll miss less interest than the amount of overdraft fees you'll incur if you lean the other way and cut things too close.
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