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ING Earns Interest When You Send Checks

According to Flexo [3], when you use ING Direct’s bill-paying check service, the funds are debited from your account immediately – not when the check clears. That’s a different of at least a few days because of how long it typically takes for a letter to reach its destination (2-3 days) and how long it takes for it to clear (1 day with Check 21). He asked whether other banks were the same and I can say definitely that’s not how it works at Bank of America, the only bank I’ve ever used the billpaying feature at.

With Bank of America, you enter in the destination address, payee, and a desired delivery date. I recently sent some money and a Bank of America representative actually called me up to confirm I had initiated the transaction (and not some thief). Incidentally, from what I can recall, he simply asked me for the destination and the payee so even if it was a phishing attempt he would’ve gotten zero useful information (plus he provided all the payment information anyway like the amount). The transaction was authorized, the check was sent, and the funds weren’t actually withdrawn from my account until the check was cashed.

You might ask “what’s the big deal?” It’s not really a big deal but it’s the principle of the matter. When you write a paper check, the funds aren’t withdrawn until the check is cashed and you are continuing to earn interest. Why shouldn’t ING’s system this way too?

A commenter on Consumerism Commentary said that Bank of America debits immediately too but my memory says differently, anyone care to corroborate either of the stories?