Home > cultural commentary > Online banking and conjuring tricks

Online banking and conjuring tricks

Last week I moved some money from one bank account to another. If I do this between accounts at the same bank it’s instant. These accounts are with different banks, so the warning comes up that it may take 3-5 working days for the transfer even though the money’s gone from one account straight away.

Now we were used to this in the days of manual banking as bits of paper got pushed from desk to desk, but how come it’s still like that in the internet age? My assumption is that they could move the money instantly, because, for example, local authorities and large businesses can have an arrangement in which their current account at close of trading is automatically deposited in an overnight account that enables them to make a penny or a buck, and then the money’s re-deposited in the current account the following morning.

For private customers, however, transferring money is subject to what is essentially a conjuring trick in which your money disappears for several days, during which time the bank is using it to make money on its own behalf. It’s routine, but the more I think about it the more I think it’s still my money and I should be getting that interest or a good proportion of it.

We’re not talking about a lot. Even at LIBOR rates we’re talking about somewhere less than £1 on the amount I transferred. I know the theory of banking is that they make money by taking deposits and lending, and the margin between the interest rate they get and the rate they pay. If they didn’t do that they couldn’t cover costs. But this ‘disappearing’ money seems to me to be a hangover from older practices (it always used to take 3 days so why tell the customers we can do it instantly now?). And because there’s not even much public knowledge that for banks it’s a money-making opportunity, and private customers can’t share in it, it seems to have a whiff of chicanery about it.

I’m open to refutations, observations, comments from people with actual banking knowledge…

  1. February 14, 2011 at 11:51 pm

    LOL! Yes, indeed, you can bet that they make money. If a hundred people transfer money in one day, multiply your one-pound times 100—easy money—multiply that times 365 days. I’d love to have it.

    However, if you swipe your debit card, the money leaves your bank account before you can get your merchandise bagged.

    I once heard a lecture. Banks make BIG money off people who bounce checks and pay fines. Credit card companies make the bulk of their money off people who pay high interest rates and people who ‘oops, forget’ to pay on time. They only get upset when people stop paying altogether. Is it any wonder why loans and mortgages were made to people with bad credit? Not at all, because these people also pay the highest interest–easy money. Until everything went boom.

  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: