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Holds on transfers
July 11, 2019
7:42 am
Saver-Mom
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Why are there holds on transferred funds?
I transferred money online from my main bank to Tang. The money showed as deducted from main bank and added to Tang account, but Tang put it on a hold, so I could not transfer it out to another online bank. I understand if a cheque is deposited they want time to verify if funds are available in sender’s account, but why have holds on funds transferred electronically? Do they all do this?

July 11, 2019
8:33 am
Brimleychen
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If it is EFT, then it should be immediately available for use once the clearing house processed.

Most businesses and individuals that are doing payroll transactions via an FI and/or individuals that transfer money or pay bills via EFT. Can you imagine you need to wait for a few days for your pay check?

I always use the main bank like TD/CIBC to inter-transfer among my high interest savings, and never be on hold once the money shown up in main bank. The only catch is the two business days for the fund to show.

Of course, when coming to Tangerine and EQBank etc, they can dictate their own holding policies. So they are not right for inter-transfer.

July 11, 2019
9:51 am
AltaRed
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I think all inter-institutional EFTs take 1-2 business days. Never seen it any other way myself, but I've also never seen a hold once EFT funds were in fact deposited into the receiving account.

July 11, 2019
10:29 am
Brimleychen
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AltaRed said
I think all inter-institutional EFTs take 1-2 business days. Never seen it any other way myself, but I've also never seen a hold once EFT funds were in fact deposited into the receiving account.  

https://www.eqbank.ca/general-banking/legal/hold-funds-policy

July 11, 2019
10:30 am
Saver-Mom
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The transfer was initiated on the 7th. Each bank showed the debit or credit on the 8th. As of today, the 11th, Tang still has a hold on the money...

July 11, 2019
1:17 pm
Loonie
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Based on previous comments, I suspect AltaRed only does these transfers through brokerage account and in/out of Big Five. The brokerage route may operate more smoothly although usually offering lower rates because one has more investments there and they know more about you.

As far as I can see, it's normal for the alternative FIs that most of us use to have holds that seem unconscionable. I have never heard any of them justify this but imagine they would cite the potential for the sending FI to rescind the transaction because it was somehow fraudulent.
It irritates me that there seems to be no way of circumventing these arbitrary rules. Holding periods seem to be increasing, from what i have seen. It's a one-size-fits-all solution which they deem necessary when there is no face-to-face contact.
They do seem to be inordinately suspicious of bank-to-bank EFTs when dealing with personal accounts as opposed to corporate (paycheques, OAS, pension plans, annuities from insurance companies, etc.)

Rick has reminded us that one approach is to set up as many direct links as you can. Then you only have one delay, rather than going through a hub which takes two delays, and to pull or push depending on which is going to be faster. EQ, for example, allows 10 links. Depending on how many FIs you deal with, this may be a bit of work but worthwhile in the long run. In some circumstances, writing yourself a cheque and depositing online may be a solution as it only involves one delay.

Even worse are the FIs which don't even execute your instructions for a few days, such as Motus.

Bottom line is, they are getting away with it. I'm open to hearing there is a good reason for it which can be verified, but have heard none so far.

July 11, 2019
1:20 pm
Doug
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Short answer: EFTs are like electronic cheques and could still be returned within 7-10 business days for reasons like, among other things, insufficient funds or funds not cleared. To avoid holds, you can "push" money out from your one financial institution's online banking interface to your linked bank account and there should be no hold. If that's what you did and Tangerine put a hold on it, then it could be a manual hold they placed pending a fraud review or something, but it's not a clearing hold (or ought not to be) since it's cleared funds you authorized from the sending bank.

EQ Bank doesn't have access to funds limits, which is a major bone of contention with me particularly since they're marketing themselves as a day-to-day banking bank, not a savings bank like Oaken Financial or Hubert Financial. So, if they don't introduce access to funds limits, then I'll be ending my relationship with them at some point in the next 12-18 months, no question.

Most banks, like Tangerine, Simplii Financial, Manulife Bank, Motive Financial, Alterna Bank, and the Big 5, offer access to funds limits whereby depending on your creditworthiness, "pulled" EFT transfers and/or cheques deposits to a certain dollar value are not held.

Edit: To add to what Loonie wrote, yes, I set up two-way links with all my FIs (haven't set up EQ Bank with my other FIs yet) and with my Scotia iTRADE and PayPal accounts such that I can push or pull my funds depending on if I need to use them for something. If I just want to maximize my interest earned (if I were playing a temporary HISA promo game still), then I'd pull the funds and not worry about the hold. If I need to make a bill payment and my funds are at Hubert or Implicity, I'd probably push the funds out, or I'd pull them in to Tangerine, which doesn't hold pulled fund transfers up to your access to funds limit (mine is the highest, $5,000). Essentially, downside of pushing funds, while no holds, is you lose 1-2 days' interest (3-4 days' interest if pushing to Motus Bank or Meridian Credit Union due to their arcane transaction processing rules).

Cheers,
Doug

July 11, 2019
1:39 pm
Loonie
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OK, so they are concerned about possible fraud. But this does not really hold water with me. Why are they so suspicious of fraud with regular customers with good credit ratings and no negative histories with them? To be consistent, if FIs have 7-10 days in which to rescind a transfer, then, logically, the hold period should be 11 days, but none is that long. And why are the large banks, with lesser hold periods, less concerned about fraud?
It's up to the sending FI to ascertain that the money is actually available before they send it, and I think we would all understand if the funds were not sent because they were not there or had not cleared.
Perhaps this is the cost, to us, of doing business with a smaller FI, the trade-off for better rates.

July 11, 2019
3:27 pm
Doug
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Loonie said
OK, so they are concerned about possible fraud. But this does not really hold water with me. Why are they so suspicious of fraud with regular customers with good credit ratings and no negative histories with them? To be consistent, if FIs have 7-10 days in which to rescind a transfer, then, logically, the hold period should be 11 days, but none is that long. And why are the large banks, with lesser hold periods, less concerned about fraud?
It's up to the sending FI to ascertain that the money is actually available before they send it, and I think we would all understand if the funds were not sent because they were not there or had not cleared.
Perhaps this is the cost, to us, of doing business with a smaller FI, the trade-off for better rates.  

Well, the Access to Funds Regulations provide for banks having to make funds available four business days after the day of the deposit, if done with a teller, or 5 five business days after the day of the deposit, if done through any other means, so that's the reason why the lesser hold period. Interestingly, being provincially regulated, Hubert, Implicity, and the Manitoba virtual credit union operations all hold deposits for 10 calendar days because the Access to Funds Regulations don't apply to them.

Personally, I agree with you and the OP on the lunacy of these rules. Banks are being too strict and the federal government originally wanted a 3 business day hold period, but the Canadian Bankers Association and Canadian Credit Union Association all pushed back, fought for, and won a longer hold period. To them, it's all about risk management, but the risk is minimal, I'd argue.

I don't know that it's about fraud in SaverMom's case, but seeing as how they can't be holding pushed funds, that's the only explanation at this point. I don't think they legitimately think she's a fraudster but they may have held the funds until their fraud team can follow up with her or do their own due diligence to ascertain source of funds for the purposes of anti-money laundering and terrorism financing provisions. 🙁

Cheers,
Doug

July 11, 2019
5:14 pm
Norman1
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Saver-Mom said
Why are there holds on transferred funds?

…I understand if a cheque is deposited they want time to verify if funds are available in sender’s account, but why have holds on funds transferred electronically? Do they all do this?

That's not how cheques and preauthorized debits are really cleared. With a pull, by paper cheque or electronic pre-authorized debit, one is taking funds and not sending it.

When one takes or pulls funds, the holder of the account being debited has a window to dispute the debit and have the debit returned. Insufficient funds (NSF) is not the only reason the debit can be returned for.

As well, there's no actual positive confirmation from the financial institution of the account being debited. If the pulling financial institution doesn't hear anything negative back after certain number of days, then the pull is presumed to not have failed for certain reasons. The number of days for the various return reasons are in sections 4, 5, and 6 of Rule A4 and in section 23 of Rule H1.

For reasons like NSF, windows is small. The drawee financial institution must return the item "no later than the Business Day following receipt by the first organizational unit of the Drawee that is able to make or act upon a decision to dishonour the Item".

For some other reasons, 90 calendar days are allowed. For paper cheques, some reasons are allowed up to six years later!

Just because a pull doesn't bounce within the NSF time window doesn't mean the pull can't bounce for some other reason later.

As Doug suggested, one needs to push funds to actually send money. When pushing, the transaction is final. The sender cannot afterwards take the money out of the recipient's account through the clearing system. That's why there are no holds on funds pushed using direct deposit, wire transfer, or Interac e-Transfer.

July 11, 2019
5:40 pm
Doug
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Norman1 said

Saver-Mom said
Why are there holds on transferred funds?

…I understand if a cheque is deposited they want time to verify if funds are available in sender’s account, but why have holds on funds transferred electronically? Do they all do this?

That's not how cheques and preauthorized debits are really cleared. With a pull, by paper cheque or electronic pre-authorized debit, one is taking funds and not sending it.

When one takes or pulls funds, the holder of the account being debited has a window to dispute the debit and have the debit returned. Insufficient funds (NSF) is not the only reason the debit can be returned for.

As well, there's no actual positive confirmation from the financial institution of the account being debited. If the pulling financial institution doesn't hear anything negative back after certain number of days, then the pull is presumed to not have failed for certain reasons. The number of days for the various return reasons are in sections 4, 5, and 6 of Rule A4 and in section 23 of Rule H1.

For reasons like NSF, windows is small. The drawee financial institution must return the item "no later than the Business Day following receipt by the first organizational unit of the Drawee that is able to make or act upon a decision to dishonour the Item".

For some other reasons, 90 calendar days are allowed. For paper cheques, some reasons are allowed up to six years later!

Just because a pull doesn't bounce within the NSF time window doesn't mean the pull can't bounce for some other reason later.

As Doug suggested, one needs to push funds to actually send money. When pushing, the transaction is final. The sender cannot afterwards take the money out of the recipient's account through the clearing system. That's why there are no holds on funds pushed using direct deposit, wire transfer, or Interac e-Transfer.  

Thanks, Norman. Indeed, one of those reasons with the longest return timeframe is "forged endorsement". 🙂

Cheers,
Doug

July 11, 2019
6:31 pm
Loonie
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I find the attitude of distrust, enshrined in rules and regs, towards each and every Canadian, unacceptable. The attitude seems to be "guilty until proven innocent" and "we can do this because we've got your money and you can't stop us".
You can't even hide it under the mattress any more (not that you would want to) because then they are suspicious of it because it wasn't residing in a bank ledger.
Almost none of us are into "money laundering". We have lifetimes of banking experience, often with the same bank. They know who we are, sometimes personally if in-branch. They should get a grip on themselves and be realistic. It seems like they're too lazy to run the proper filters.
Way too much Big Brother.

July 12, 2019
12:03 am
Rick
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I only pull when I don't have a choice or don't care if it's on hold. If you schedule a transfer, it usually gets yanked first thing in the morning and sometimes shows up at the receiving bank by the evening, or next business day at latest. Talked to a csr at Motive who was happy to split up a large ATM deposit into several accounts and I was happy to have it sit there for the hold period (felt weird putting a 6 figure check into an ATM!). The nice thing about pulling is it shows up in your account and starts earning interest instantly....if you bank with Me2Me (Tang doesn't use it). That and transfer limits are usually more liberal when you are pulling money into their FI from another, and donating banks limits don't really apply. Isn't Motives' some crazy amount??? 1 or 2 Million? I forget. More than I'll ever need.
Other than that, nothing much you can do about it other than plan for it an play the system to your advantage. Embrace the hold periodsf-winksf-laugh

July 12, 2019
3:03 am
Loonie
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I skimmed through the links provided by Norman and could not find anything specific about holding periods for average everyday situations other than the quote he gives from Rule A4, which does not add any clarity since we can't know when an item might reach a particular desk or if it will ever be reviewed by any human being, which seems increasingly unlikely in most run-of-the-mill situations.

Maybe I missed something, in which case I hope someone can point me to the clearer wording.

Otherwise, I conclude that Doug's comment that the procedure is five days after deposit for online and four days for teller is a convention.

For Saver-Mom, it seems you must have pulled when you shoulda pushed! Somehow, I doubt they teach this important distinction in "financial literacy" classes.

July 12, 2019
5:39 am
Saver-Mom
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Hi all, good commentary.

I can’t push/pull from my big bank online, to my knowledge. I’ve banked with them since teenage years with a grandfathered account that costs me no fees with a min balance.

I’ve been with Tang since early ING years, so I doubt they are concerned about any fraud with me. Have alternately had high and low balances with them according to their promos. I find their online platform easy to use (was easier before the changes they made last year), but their 3 link max is insufficient.

BTW the funds are still on hold now, July 12th, transfer having been initiated the 7th, and showing online on the 8th.

Rackin’ frackin’....

July 12, 2019
8:14 am
Doug
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Loonie said
I skimmed through the links provided by Norman and could not find anything specific about holding periods for average everyday situations other than the quote he gives from Rule A4, which does not add any clarity since we can't know when an item might reach a particular desk or if it will ever be reviewed by any human being, which seems increasingly unlikely in most run-of-the-mill situations.

Maybe I missed something, in which case I hope someone can point me to the clearer wording.

Otherwise, I conclude that Doug's comment that the procedure is five days after deposit for online and four days for teller is a convention.

The cheque hold period used to be a Voluntary Code that Canadian banks and federally-regulated financial institutions agreed to and which the Canadian Bankers Association oversaw. Under the Harper government, they sought to formalize this regulation and originally wanted a 3 day hold period. However, the industry sought and won some concessions, notably the longer hold period and that the shortened hold period only applies on cheques up to $1,500. For cheques over $1,500, the requirement is 7 business days, which is what it was before. See: https://laws-lois.justice.gc.ca/eng/regulations/SOR-2012-24/page-1.html#h-785130

For Saver-Mom, it seems you must have pulled when you shoulda pushed! Somehow, I doubt they teach this important distinction in "financial literacy" classes.  

LOL, what financial literacy classes? A major bone of contention for sure, and I agree that unless you have experience from the financial industry (as I do) or you've looked into it extensively (like Rick and Norman), you don't became aware of these subtleties. 😉

Cheers,
Doug

July 12, 2019
8:17 am
Doug
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Saver-Mom said
Hi all, good commentary.

I can’t push/pull from my big bank online, to my knowledge. I’ve banked with them since teenage years with a grandfathered account that costs me no fees with a min balance.

Most Big 5 banks offer bank-to-bank transfers, but don't make them readily available. Which one do you deal with?

I’ve been with Tang since early ING years, so I doubt they are concerned about any fraud with me. Have alternately had high and low balances with them according to their promos. I find their online platform easy to use (was easier before the changes they made last year), but their 3 link max is insufficient.

BTW the funds are still on hold now, July 12th, transfer having been initiated the 7th, and showing online on the 8th.

Rackin’ frackin’....  

Yes, we complained about Tangerine's 3 external account limit being raised, which was something then CEO Peter Aceto said they'd look into raising in a Q&A re: the reduced access to funds with Tangerine leaving The Exchange for Scotiabank ABM Network. To date, they've not done anything and Scotiabank has since lost the company-owned Shell gas station locations to BMO, though they picked up a number of Esso stations acquired by 7-Eleven Canada and rebranded from On the Run to 7-Eleven in the western provinces.

Cheers,
Doug

July 12, 2019
1:25 pm
Loonie
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Thanks for the link, Doug.
The more I read, the more absurd it seems to get.
According to these Regulations, which I think are worth repeating here, it can take 9 (nine) business days, including the day of deposit, for a hold to evaporate since many of us are doing online transfers greater than $1500. Throw in a stat hol and you have a full two weeks!

"3 An institution must make available for withdrawal any funds deposited by cheque or other instrument to a retail deposit account or to a deposit account held by an eligible enterprise

(a) in the case of a cheque or other instrument not exceeding $1,500, no more than four business days after the day of the deposit if it is deposited in person with an employee at one of the institution’s branches or points of service or no more than five business days after the day of the deposit if it is deposited in any other manner; and

(b) in the case of a cheque or other instrument greater than $1,500, no more than seven business days after the day of the deposit if it is deposited in person with an employee at one of the institution’s branches or points of service or no more than eight business days after the day of the deposit if it is deposited in any other manner."

So, I guess we're supposed to feel privileged if it only takes a week!

July 12, 2019
1:34 pm
Loonie
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Doug said

LOL, what financial literacy classes? A major bone of contention for sure, and I agree that unless you have experience from the financial industry (as I do) or you've looked into it extensively (like Rick and Norman), you don't became aware of these subtleties. 😉

Cheers,
Doug  

Quite. I was being tongue-in-cheek.
Not only are such classes uncommon, but, from what I've seen, they pretty much repeat what the FIs want you to know. There are lots of people who don't even know that much, of course. But for anyone looking for a critical analysis, on the finer points of pushes and pulls for instance, they'd need to look a lot harder.

July 12, 2019
3:14 pm
rhvic
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I recently made two transfers to EQ Bank, one from Motive and one from Hubert. The transfer from Motive took 5 business days to clear. The transfer from Hubert was accepted and available the next day!

Not sure what logic is being applied here.

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