OT, Totally OT: How Do Banks Slow Down Mail To You?

[Paul Alciatore]

I have a number of IRA and 401k accounts and, being retired, need to take money from them from time to time. Every time I do this, they tell me that the only way that they will send this money to me is with a check IN THE US MAIL. And it always takes at least five days to get it.

I can mail a standard, first class letter to any address in the continental US and it will arrive in two or at most three days. How do the banks and other financial institutions manage to slow the delivery of these mailed checks down so much? Is there a special type of stamp or envelope? Does this happen with metered mail? Or what?

And don't tell me this is not deliberate. Just think how much they can make with the funds that are in transit (US Mail) to all of their customers each day. It must be a fortune for them. And they don't pay a single cent of interest on those dollars. They keep it all. Greedy bas*****!

But I really want to know how they can slow the mail down.

[vpt]

Process and handling time.

[danlb]

It's a technique known as aging accounts. They figure out how long they can delay it, and they just don't tun it over to the US mail till the last moment.

My investment firm (If I recall correctly) will "sell" the stock at the end of trading that day, and transfer it electronically the next day. It's pending against my account that night and in my account on the 3rd day.

This could be done in a matter of minutes. The interbank exchange network is as fast as any other network. The excuse often given for the delays is the need for delays to keep someone from laundering funds by quickly moving it through multiple accounts, making it hard to trace when it's suddenly withdrawn.

[Doc Nickel]

But I really want to know how they can slow the mail down.

-Oy. It's not a conspiracy, it's called "being a big institution with about 1,000 pages of regulations and procedures to deal with".

Somebody has to officially "okay" the payment- whether individually or in bulk.

The checks have to be printed, collated with any corresponding documentation (mostly automated these days) and stuffed into an envelope.

The envelopes are collected, and pouched for the Post Office to come pick up.

The PO picks them up, and basically dumps them into the automated sorters to get them on their way. But the first three steps could take an easy two or three days- at virtually every step, somebody is double-checking and cross-checking, managers are pulling totals and results, stuff gets pulled out of the line if a discrepancy is found, etc.

You're one guy. You write a check, you put it in an envelope, you drive it to the Post Office. No biggie. The Bank is dealing with literally hundreds of thousands of checks, and envelopes by the cartload- all of which is watched closely by a dozen people, and handled by a dozen more.

The fact is, it's actually remarkable how quickly it DOES get done, and how relatively few errors or losses there are.

Doc.

[J Tiers]

That's not really an issue. You lose a tad of interest, but not enough to be of much effect on you. Less than your morning Starbucks triple latte (if you can stand the filth they call coffee). And, as pointed out, they have a lot of things to do to prevent fraud. Plenty of regulations, and the issue of "fiduciary responsibility", which they have to take reasonably seriously due to the regulations.

Of more interest (pun accepted) is the amusing way the 90 days same as cash deals are worked..... I once bought a 'fridge on one of those, because that was the way to get the best deal. I got the bills for the 1st and 2nd installments in good time. The 3rd did not arrive, so I sent off a check before the due date.

So, the 3rd actual bill arrived 6 days AFTER the date it was due. That has to be some sort of fraud, but it is nearly impossible to prove, as the bulk mail bears no dated cancellation. But it for-sure arrived late. And do NOT even TRY to tell me it was not a deliberate act.... It's just too much of a coincidence. I have seen too many other comments about that same thing happening.

I had foiled them by sending the check, but I bet most people get caught by the late billing. And, of course, the resulting late payment will get them not only the privilege of paying the interest for the 90 days, AND cancelling the best price deal they thought they were getting (since they did not pay in time), but also a late fee on top of all the other stuff.

[bborr01]

I am on the board of directors for a financial institution. There are a lot of regulations for a lot of different things. I have some of the same type of questions.

If I deposit a check and it bounces it takes almost two weeks for me to get a letter in the mail that tells me that the deposit has been reversed. The financial institution re-deposits the check a second time in case the deposit to cover it was just deposited late. In most cases it is a tenant bouncing a check and it sets me back two weeks in the process of having to take action to keep the property occupied with paying tenants. It is very annoying.

My guess is that they intentionally send it fourth class mail or some other trick like that.

I did take it up with the head teller and now I get a phone call if the check comes back NSF.

[danlb]

If I deposit a check and it bounces it takes almost two weeks for me to get a letter in the mail that tells me that the deposit has been reversed. The financial institution re-deposits the check a second time in case the deposit to cover it was just deposited late.

We had a bit of a scandal a few decades ago, where it was found that several banks were using a late notice to deliberately increase the charges for bounced checks. How does this work? The California law allows a bounced check charge for BOTH banks each time a check is submitted with NSF. Delaying the notice allows bank A to charge $30 and bank B to charge the same EACH TIME that bank B submits the check for payment. If they did it 3 times the banks could garner $180 before the customer knows that it's bouncing.

The other trick they used was to cash the biggest checks first each night, and to apply deposits AFTER they bounced the checks. If they did it right they could turn a $1 overdraft into a $300 deficit in the course of an evening.

I know that the major banks were busted. I don't know if they changed their ways. I have not bounced a check in 30 or 40 years.

Dan

[Noitoen]

Here in Portugal we don't use cheques often anymore. Mobile phone bank access, electronic payment, phone to phone transfer and even if you need to withdraw some phisical money from a Atm machine and you forgot your card, you can generate a code on your phone and use it to get the funds. It's illegal to pay cash more than 3000 euro for anything though.

[DennisCA]

Cheques were phased out in the 90s here. Stuff is very electronic here too like in portugal, but if this bit below passed in Finland.... We'd be setting the politicians on fire.

I is illegal to pay cash more than 3000 euro foe anything though.

[platypus2020]

money - fast in, slow out

[3 Phase Lightbulb]

When I deposit very large amounts they hold onto the funds for ~5 days before it becomes "available" but is still reflected in my account and I'm still receiving interest on it during that 5 day hold.

[Dave P.]

in Finland.... We'd be setting the politicians on fire.

Could you come to the US any time soon.........
Dave

[OaklandGB]

Regarding NSF notices. I am a retired commercial credit manager in the US and managed over $100 million in accounts receivable. We used to suffer the same 3 week lag in notice on NSF checks. Can't do it. Bank we dealt with had a treasury management module which we accessed daily. NSFs appeared there same day, and we could act on them. There was a cost or "fee" associated with that access however. Are you surprised?

Mail time varied across the US. One observation though, customers who had cash flow, and slow pay problems were also having mail delivery problems....often using metering to avoid the cancelled postage date. Meter it on the due date, leave the envelope in the office for a week, then mail. Surely you've heard "checks in the mail".... Large investment firms and banks deal with huge volumes of outgoing mail, dumped into the mail system to get it to you. Your check competes with 4 or 5 times the volume of 'junk mail' to get to you. I've heard recently - not sure if just urban legend- that mail carriers are not allowed to back up their trucks more than a few times per shift. Maybe someone can confirm or deny that. ?

Anyway, the systems in use are stretched, and it is a wonder that any mail gets through reliably. Most large firms are now pushing really hard on paperless....for good reason. Only hope the systems are secure enough to trust. And the beat goes on....

[Frank K]

Mail time varied across the US. One observation though, customers who had cash flow, and slow pay problems were also having mail delivery problems....often using metering to avoid the cancelled postage date. Meter it on the due date, leave the envelope in the office for a week, then mail. Surely you've heard "checks in the mail".... Large investment firms and banks deal with huge volumes of outgoing mail, dumped into the mail system to get it to you. Your check competes with 4 or 5 times the volume of 'junk mail' to get to you. I've heard recently - not sure if just urban legend- that mail carriers are not allowed to back up their trucks more than a few times per shift. Maybe someone can confirm or deny that. ?

Actually the rules concerning mail that has been postage metered are a bit convoluted. First, the mail must be deposited with the Post Office on the same date as the date on the meter mark. While you can mail a single piece or two at the corner mail box with a postage meter mark, quantities of metered mail must be delivered to the post office so the they can determine that it contains the proper postage, etc. In addition, large mailers such as financial institutions get a discount on their postage for pre-sorting the deposited mail by zip code so that also needs to be verified. So there's no way they prepare the mail and then "age" it.

Companies are allowed to postage meter return reply envelopes that are included with bills, etc. but the meter mark has no date on it.

For first class mail the country is divided into Overnight, Two Day and Three Day zones from the point the mail is deposited. For example, in New York City, all 5 boros and a couple of nearby counties are Overnight. Nearby states are Two Day and the rest of the country is Three Day. So, in theory, it shouldn't take more than 3 days for a first class letter to get from anywhere to anywhere. In theory. But then there are Sundays and legal holidays that also factor into the delivery times. A favorite trick of banks is to meter their large mailings on a Friday and then deliver them to the designated Post Office on Friday evening. If its late enough and the mailing is big enough the late time and Sunday can factor into delivery schedules.

I'm not really clear on what you mean about letter carriers backing up their trucks. Can you elaborate?

[754]

That's not really an issue. You lose a tad of interest, but not enough to be of much effect on you. Less than your morning Starbucks triple latte (if you can stand the filth they call coffee). And, as pointed out, they have a lot of things to do to prevent fraud. Plenty of regulations, and the issue of "fiduciary responsibility", which they have to take reasonably seriously due to the regulations.

Of more interest (pun accepted) is the amusing way the 90 days same as cash deals are worked..... I once bought a 'fridge on one of those, because that was the way to get the best deal. I got the bills for the 1st and 2nd installments in good time. The 3rd did not arrive, so I sent off a check before the due date.

So, the 3rd actual bill arrived 6 days AFTER the date it was due. That has to be some sort of fraud, but it is nearly impossible to prove, as the bulk mail bears no dated cancellation. But it for-sure arrived late. And do NOT even TRY to tell me it was not a deliberate act.... It's just too much of a coincidence. I have seen too many other comments about that same thing happening.

I had foiled them by sending the check, but I bet most people get caught by the late billing. And, of course, the resulting late payment will get them not only the privilege of paying the interest for the 90 days, AND cancelling the best price deal they thought they were getting (since they did not pay in time), but also a late fee on top of all the other stuff.

I guess I am a Filth drinking type of machining person, maybe we can still be friends ?