When you transfer money between two accounts you own, the transfer goes through a system called ACH, which stands for Automated Clearing House. You can initiate the transfer either from the sending account or from the receiving account.
When you initiate the transfer from the sending account, it’s an ACH credit, or figuratively an ACH Push — you are pushing the money into the destination account. When you have payroll direct deposit, your employer is doing an ACH push into your account.
When you initiate the transfer from the receiving account, it’s an ACH debit, or figuratively an ACH Pull — you are pulling the money in from the source account. When you give your bank account to a utility for automatic payments, the utility is doing an ACH pull against your bank account.
When you transfer money between two accounts you own, if you have a choice between push and pull, push, don’t pull.
This is because when you push, the sending bank knows how much money you have. It lets you push only if you have enough money in your account. When the money arrives at the receiving account, the receiving bank treats it as good funds because the sending bank already verified you have enough money before sending it. There’s no hold on the money pushed in.
When you pull, they don’t know whether you have enough money in your source account. The source bank can always come back and reverse it. This is for your protection. You don’t want random people to pull money from your bank account and not have recourse. Because of this lack of confidence in whether the money is good or not, the receiving bank often places a hold on the money pulled in. Sometimes the hold can be as long as a full week.
Therefore when you have a choice, push the money from the source. Usually it will go faster and you won’t be subject to a hold. Also see previous post Why Is ACH Slower At Some Places Than Others?
Some banks charge a fee as much as $3 for pushing out money by ACH but they don’t charge for pulling money in. If your bank is like that, look for a better one.
[Photo credit: Flickr user Steve Snodgrass]
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