Web-based banks like ING Direct, HSBC Direct and Emigrant are extremely popular among savers looking for great rates. They often pay significantly more than your local bank and credit union.
The only "downside" associated with these banks is that you do not have instantaneous access to your money. Usually, it only takes a day or two to move money from the on-line account to your local checking account but as a recent Wall Street Journal article detailed, waits of up to four days are possible. That's a long time when you need the money "yesterday" to pay for a new car or some other expensive purchase.
The Wall Street Journal article explains that funds transferred between two different banks aren't really sent "on-line" as many would expect. Instead there are several steps and these steps are often intentionally slowed down to give banks more time to spot potentially fraudulent activity.
In one example, a client of an online bank needed money quickly to buy a new car. She requested a transfer on Monday morning but the request wasn't processed until Tuesday and on Wednesday the transfer was still listed as "pending." Long story short, the money wasn't available to be used until Thursday.
Most of the online banks clearly state that the transfer process can take as long as four days so really, the burden is on the customer to plan ahead and be aware that it can take as long as four days to have money in your hand ready to spend. Another alternative outlined in the article is to use paper checks. This would entail opening a small checking account at the same bank as the online checking account. In this case, you could very quickly transfer money from the savings account to the checking account and then you could write a paper check which would probably clear as fast or faster than waiting for the previously described bank to bank transfer to happen.
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