Vanguard electronic bank transfers

Questions on how we spend our money and our time - consumer goods and services, home and vehicle, leisure and recreational activities
Post Reply
yardarm
Posts: 17
Joined: Wed Sep 27, 2017 10:18 am

Vanguard electronic bank transfers

Post by yardarm » Tue Sep 11, 2018 10:02 am

Prior to posting this topic, I did a search of the discussions on Bogleheads about ACH electronic transfers, check writing, and similar topics. There was a significant amount of discussion in the past but some of it is getting dated due to constantly evolving security concerns with hacking and various forms of fraud prevalent with online transactions.

So this question is to revisit the topic with a goal of being able to reliably transfer funds between Vanguard and a saving/checking institution. What are the pros and cons of either opening a check writing account with Vanguard or establishing a link between Vanguard and a bank or credit union?

I believe that I read a post that stated transfer action must initiate with Vanguard (push/pull) and not the bank or credit union. Is this correct and is this a security protocol of Vanguard? What other safeguards should the Vanguard investor consider? In the past we did business with Edward Jones and there was always the same person to contact for transfers and transactions and there was a measure of safety/peace-of-mind built in to the familiarity with the Jones representative (not an endorsement of Jones!).

Vanguard states that they are open 24/7; is this factual or misleading when it comes to transfer actions?

Does anyone have any statistics or is there a Vanguard statistic showing the number/percentage of accounts that are linked or the number of accounts with check writing features?

random_walker_77
Posts: 605
Joined: Tue May 21, 2013 8:49 pm

Re: Vanguard electronic bank transfers

Post by random_walker_77 » Tue Sep 11, 2018 10:10 am

Some details that surprised me:

1) If you open checkwriting on an account, and don't write any checks for an extended period of time (in my case, years), they will contact you to let you know they'll be turning off your checkwriting on that fund. The stated rationale is to improve security.

2) If you electronically link your bank account, and buy new funds using an EFT transfer from your bank, your purchase goes today, at today's price, pending settlement of funds. This is generous as they're allowing you to buy, even though vanguard doesn't have your money yet. I like this.

3) Yes, you have to push/pull from vanguard. But, they allow you to pull surprisingly large amounts of money. Much more than any other bank I've personally seen. I'm not sure about pushing out large amounts from vanguard to another bank, but on the pull side, I haven't found a limit yet, whereas all my other banks and brokerages, I've hit the limit before.

random_walker_77
Posts: 605
Joined: Tue May 21, 2013 8:49 pm

Re: Vanguard electronic bank transfers

Post by random_walker_77 » Tue Sep 11, 2018 10:12 am

Vanguard's website is open nearly 24/7, but funds transfers happen only on business days, w/ the usual ETF transfer delays (I'm not sure how much for pushes towards a bank, and for pulls, it doesn't matter as your purchase happens the same day. I think my bank usually reports the money as withdrawing the next day).

Also, you get email confirmations when you submit the transaction, and another one when it completes. Not sure if I turned on an option to enable that...

User avatar
Doc
Posts: 8511
Joined: Sat Feb 24, 2007 1:10 pm
Location: Two left turns from Larry

Re: Vanguard electronic bank transfers

Post by Doc » Tue Sep 11, 2018 10:19 am

yardarm wrote:
Tue Sep 11, 2018 10:02 am
What are the pros and cons of either opening a check writing account with Vanguard or establishing a link between Vanguard and a bank or credit union?
There is no way I would have a check writing facility at Vanguard or any broker. There is just no added value to justify any risk involved no matter how small that risk might be.

Transferring funds to/from a broker/bank pair is straightforward after it has been set up. A pull initiated at Vanguard or Schwab is available to trade immediately and clears in one business day. A push from the broker to the bank takes two business days unless you have settled cash available (not MM) at the broker or have a margin account and this takes only one business days.

I don't deal with credit unions. They are not banks. They have more limited capability which is probably why they can offer higher yields on savings.
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.

sport
Posts: 7182
Joined: Tue Feb 27, 2007 3:26 pm
Location: Cleveland, OH

Re: Vanguard electronic bank transfers

Post by sport » Tue Sep 11, 2018 10:33 am

Vanguard only offers check writing on MM funds and some bond funds. The Vanguard checks are not valid for less than $250, so they have limited usefulness. If I want to write a check using money in my Vanguard account, I just transfer the money to my regular checking account at my bank. It may take a day or two to show up there. If I did want to use Vanguard checks, I would use them with a fund that has a limited amount of money in it, for fraud control. I would not use them with a bond fund in a taxable account because each check written would be a taxable event.

User avatar
CABob
Posts: 4584
Joined: Sun Feb 25, 2007 8:55 pm
Location: Southern California

Re: Vanguard electronic bank transfers

Post by CABob » Tue Sep 11, 2018 10:37 am

random_walker_77 wrote:
Tue Sep 11, 2018 10:10 am

1) If you open checkwriting on an account, and don't write any checks for an extended period of time (in my case, years), they will contact you to let you know they'll be turning off your checkwriting on that fund. The stated rationale is to improve security.
Interesting, I had not heard that before although it does make sense. I have check writing on one of my funds and don't use it often so I guess I should make sure I don't go too long. Do you, or anyone, know how long before Vanguard starts thinking about closing the check writing? It has been well over a year since I have last used it. Perhaps one should make a point of using it every once in a while.
Bob

sport
Posts: 7182
Joined: Tue Feb 27, 2007 3:26 pm
Location: Cleveland, OH

Re: Vanguard electronic bank transfers

Post by sport » Tue Sep 11, 2018 10:51 am

CABob wrote:
Tue Sep 11, 2018 10:37 am
random_walker_77 wrote:
Tue Sep 11, 2018 10:10 am

1) If you open checkwriting on an account, and don't write any checks for an extended period of time (in my case, years), they will contact you to let you know they'll be turning off your checkwriting on that fund. The stated rationale is to improve security.
Interesting, I had not heard that before although it does make sense. I have check writing on one of my funds and don't use it often so I guess I should make sure I don't go too long. Do you, or anyone, know how long before Vanguard starts thinking about closing the check writing? It has been well over a year since I have last used it. Perhaps one should make a point of using it every once in a while.
IIRC, Vanguard did not just unilaterally close my check writing. They gave me a warning first and I could notify them If I wanted to keep the check writing option open. Since I was not using it, I had no objection to closing it.

User avatar
damjam
Posts: 942
Joined: Thu Mar 25, 2010 7:46 am

Re: Vanguard electronic bank transfers

Post by damjam » Tue Sep 11, 2018 11:08 am

sport wrote:
Tue Sep 11, 2018 10:51 am
CABob wrote:
Tue Sep 11, 2018 10:37 am
random_walker_77 wrote:
Tue Sep 11, 2018 10:10 am

1) If you open checkwriting on an account, and don't write any checks for an extended period of time (in my case, years), they will contact you to let you know they'll be turning off your checkwriting on that fund. The stated rationale is to improve security.
Interesting, I had not heard that before although it does make sense. I have check writing on one of my funds and don't use it often so I guess I should make sure I don't go too long. Do you, or anyone, know how long before Vanguard starts thinking about closing the check writing? It has been well over a year since I have last used it. Perhaps one should make a point of using it every once in a while.
IIRC, Vanguard did not just unilaterally close my check writing. They gave me a warning first and I could notify them If I wanted to keep the check writing option open. Since I was not using it, I had no objection to closing it.
They contacted me as well.
I chose to eliminate the check writing feature since I wasn't using it anymore.

User avatar
prudent
Moderator
Posts: 5616
Joined: Fri May 20, 2011 2:50 pm

Re: Vanguard electronic bank transfers

Post by prudent » Tue Sep 11, 2018 11:38 am

Topic moved to Personal Consumer Issues.

blevine
Posts: 1940
Joined: Sat Feb 27, 2010 3:57 pm
Location: New York

Re: Vanguard electronic bank transfers

Post by blevine » Tue Sep 11, 2018 11:55 am

CABob wrote:
Tue Sep 11, 2018 10:37 am
random_walker_77 wrote:
Tue Sep 11, 2018 10:10 am

1) If you open checkwriting on an account, and don't write any checks for an extended period of time (in my case, years), they will contact you to let you know they'll be turning off your checkwriting on that fund. The stated rationale is to improve security.
Interesting, I had not heard that before although it does make sense. I have check writing on one of my funds and don't use it often so I guess I should make sure I don't go too long. Do you, or anyone, know how long before Vanguard starts thinking about closing the check writing? It has been well over a year since I have last used it. Perhaps one should make a point of using it every once in a while.
I had a checkwriting account closed a while ago, but was first given the chance to prevent the closure.
I let them close it, prefer to keep my investments separate from my checking anyway.
Very easy to wire money to my bank if I need it quickly.

Amanda999
Posts: 14
Joined: Sat Apr 22, 2017 12:48 pm
Location: Boston suburbs

Re: Vanguard electronic bank transfers

Post by Amanda999 » Tue Sep 11, 2018 2:43 pm

CABob wrote:
Tue Sep 11, 2018 10:37 am
random_walker_77 wrote:
Tue Sep 11, 2018 10:10 am

1) If you open checkwriting on an account, and don't write any checks for an extended period of time (in my case, years), they will contact you to let you know they'll be turning off your checkwriting on that fund. The stated rationale is to improve security.
Interesting, I had not heard that before although it does make sense. I have check writing on one of my funds and don't use it often so I guess I should make sure I don't go too long. Do you, or anyone, know how long before Vanguard starts thinking about closing the check writing? It has been well over a year since I have last used it. Perhaps one should make a point of using it every once in a while.
I could just be an outlier, but I hadn't written a check for over 10 years on one Prime MMkt account. Vanguard never contacted me about it in any way. (I happened to find the old checkbook a few months ago, and found I could close/cancel all checks right on Vanguard's site - it was very easy.)

criticalmass
Posts: 579
Joined: Wed Feb 12, 2014 10:58 pm

Re: Vanguard electronic bank transfers

Post by criticalmass » Wed Sep 12, 2018 3:35 am

Doc wrote:
Tue Sep 11, 2018 10:19 am
yardarm wrote:
Tue Sep 11, 2018 10:02 am
What are the pros and cons of either opening a check writing account with Vanguard or establishing a link between Vanguard and a bank or credit union?
There is no way I would have a check writing facility at Vanguard or any broker. There is just no added value to justify any risk involved no matter how small that risk might be.

Transferring funds to/from a broker/bank pair is straightforward after it has been set up. A pull initiated at Vanguard or Schwab is available to trade immediately and clears in one business day. A push from the broker to the bank takes two business days unless you have settled cash available (not MM) at the broker or have a margin account and this takes only one business days.

I don't deal with credit unions. They are not banks. They have more limited capability which is probably why they can offer higher yields on savings.
:?: I’m curious, why do you perceive the risk to be greater with vanguard checks than a bank’s checks? Even if vanguard check security stinks somehow, I keep far less money in an uninsured money market account (the only vanguard account available to me for checks) than my insured bank / credit union accounts.

Also, what do you mean about “limited capability” for a credit union? I do a lot of business with Navy FCU, and their service and capabilities have far exceeded most any bank I’ve ever used, large or small. If there is a bank with better service and comparable products, I’d love to hear which one.

criticalmass
Posts: 579
Joined: Wed Feb 12, 2014 10:58 pm

Re: Vanguard electronic bank transfers

Post by criticalmass » Wed Sep 12, 2018 3:39 am

yardarm wrote:
Tue Sep 11, 2018 10:02 am
Prior to posting this topic, I did a search of the discussions on Bogleheads about ACH electronic transfers, check writing, and similar topics. There was a significant amount of discussion in the past but some of it is getting dated due to constantly evolving security concerns with hacking and various forms of fraud prevalent with online transactions.

So this question is to revisit the topic with a goal of being able to reliably transfer funds between Vanguard and a saving/checking institution. What are the pros and cons of either opening a check writing account with Vanguard or establishing a link between Vanguard and a bank or credit union?

I believe that I read a post that stated transfer action must initiate with Vanguard (push/pull) and not the bank or credit union. Is this correct and is this a security protocol of Vanguard? What other safeguards should the Vanguard investor consider?
The answer is “it depends.” Others have accurately explained traditional vanguard check writing from funds.

:moneybag There is another option, Vanguard Advantage. This gives you a traditional checkbook, no minimum check amounts, two way ACH, and a debit card on your federal money market account. Vanguard doesn’t allow both types of check writing on the same account, so if you use Advantage, the legacy checks with $250 minimums go poof.

With Flagship, Advantage is free. Otherwise there is a fee (reduced with Voyager), but it’s probably not worth paying a fee.

:!: Note that Advantage debit card services are provided by 3rd party PNC Bank, possibly PNC’s 4th party provider. I always limit funds available in accounts accessible via debit cards or checks, regardless of who services the account.
Last edited by criticalmass on Wed Sep 12, 2018 4:23 am, edited 1 time in total.

User avatar
JoMoney
Posts: 5562
Joined: Tue Jul 23, 2013 5:31 am

Re: Vanguard electronic bank transfers

Post by JoMoney » Wed Sep 12, 2018 4:11 am

A long time back, in my Pre-Vanguard Brokerage Upgrade, Mutual Fund Only account, I used to have check writing enabled on my short-term bond fund. I used it a couple times, it was a seemingly nice convenience that wasn't that useful (and could make for some tax complications if you violated a wash sale rule with dividends being reinvested).
The check writing option went away when I sold the fund and account was upgraded. I've considered signing up for Vanguard Advantage and to further reduce my bank accounts and consolidate to using Vanguard like a bank, but I don't think the potential risk is worth it. I have a free checking account that is easy enough to use, and provides a bit of a firewall between my Vanguard money and other transactions. The only way to get money out of my Vanguard account now is to 'push' it from Vanguard to my linked bank account, and I'll get a notification anytime a request is made, and there is notification and a time delay if another account is attempted to be linked.
Vanguard has a fraud protection policy, but I would prefer not to have to deal with that if I can take easy steps to avoid it happening. Fighting and waiting for an 'investigation' before you can get access to your money is not a fun situation to be in.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

yardarm
Posts: 17
Joined: Wed Sep 27, 2017 10:18 am

Re: Vanguard electronic bank transfers

Post by yardarm » Wed Sep 12, 2018 10:32 am

Thanks JoMoney; this was the information and experience that I was looking for. We currently do not have our Vanguard account linked to a bank or credit union and we are concerned for the security issues that may come into play. It sounds like that you have not had problems with using the link service Vanguard provides. I did not realize that you would receive a notification prior to any transfers if something appears less than normal. I think we need to check with Vanguard regarding these safeguards. Thanks again and we certainly agree with the sentiment that we do not want to go through the ordeal of having to deal with a fraud attack on our account. Cheers.
P.S. We had checks with Edward Jones but we rarely used them and the link-to-bank approach seems much more simple. Simple is good.

User avatar
Doc
Posts: 8511
Joined: Sat Feb 24, 2007 1:10 pm
Location: Two left turns from Larry

Re: Vanguard electronic bank transfers

Post by Doc » Wed Sep 12, 2018 11:27 am

criticalmass wrote:
Wed Sep 12, 2018 3:35 am
I’m curious, why do you perceive the risk to be greater with vanguard checks than a bank’s checks? Even if vanguard check security stinks somehow, I keep far less money in an uninsured money market account (the only vanguard account available to me for checks) than my insured bank / credit union accounts.
See JoMoney's post.
criticalmass wrote:
Wed Sep 12, 2018 3:35 am
Also, what do you mean about “limited capability” for a credit union? I do a lot of business with Navy FCU, and their service and capabilities have far exceeded most any bank I’ve ever used, large or small. If there is a bank with better service and comparable products, I’d love to hear which one.
If you are not aware of them you don't need/want them anyway so the CU is fine for you with this respect. Go to any national bank's website and look under wealth management
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.

denovo
Posts: 4310
Joined: Sun Oct 13, 2013 1:04 pm

Re: Vanguard electronic bank transfers

Post by denovo » Wed Sep 12, 2018 12:58 pm

I am a big fan of simplicity, but don't mix your brokerage with your banking.
"Don't trust everything you read on the Internet"- Abraham Lincoln

bhsince87
Posts: 1735
Joined: Thu Oct 03, 2013 1:08 pm

Re: Vanguard electronic bank transfers

Post by bhsince87 » Wed Sep 12, 2018 2:02 pm

I ditched physical checks many years ago, and have had my local bank account tied to Vanguard for 15+ years. Never had an issue.

I always generate the transaction from within Vanguard. Don't know if this is required, but it's my habit.

Biggest transaction was a few years ago when I transferred about $200k to my bank from Prime MMF. Went into the bank a couple days later, had them write a cashiers check, and Fed-Exed the check to pay off my mortgage. That was a lot cheaper than wiring the money to the mortgage company.
BH87

criticalmass
Posts: 579
Joined: Wed Feb 12, 2014 10:58 pm

Re: Vanguard electronic bank transfers

Post by criticalmass » Thu Sep 13, 2018 5:16 am

Doc wrote:
Wed Sep 12, 2018 11:27 am
criticalmass wrote:
Wed Sep 12, 2018 3:35 am
I’m curious, why do you perceive the risk to be greater with vanguard checks than a bank’s checks? Even if vanguard check security stinks somehow, I keep far less money in an uninsured money market account (the only vanguard account available to me for checks) than my insured bank / credit union accounts.
See JoMoney's post.
Do you have any specific information that you aware of? There is nothing in the post to suggest Vanguard services (or even similar Fidelity offerings) are sub standard or are missing security.
criticalmass wrote:
Wed Sep 12, 2018 3:35 am
Also, what do you mean about “limited capability” for a credit union? I do a lot of business with Navy FCU, and their service and capabilities have far exceeded most any bank I’ve ever used, large or small. If there is a bank with better service and comparable products, I’d love to hear which one.
If you are not aware of them you don't need/want them anyway so the CU is fine for you with this respect. Go to any national bank's website and look under wealth management
Your interesting claim lacks any details. I personally stay far, far away from any national (or state chartered) bank’s “wealth management” services as I prefer the boglehead approach of minimizing fees, using index funds, and leveraging my own wealth growth to letting a commercial bank “manage” my assets. But are comparing apples to apples, what is your commercial bank, and why do you think their “wealth management “ service is superior to similar offerings at say my credit union, Navy FCU?

jdb
Posts: 1454
Joined: Wed Dec 05, 2012 8:21 pm

Re: Vanguard electronic bank transfers

Post by jdb » Thu Sep 13, 2018 8:14 am

I have avoided checks for past few years due to fraud on my bank account, surprised me how easy it was for fraudster to photocopy one of my checks and insert their payee info and amounts. Three checks cleared my bank for several thousand dollars before bank caught it and eventually reversed but was giant hassle, ended up closing account and switching banks. Since then only write a few bank checks a year such as to Internal Revenue Service for quarterly withholding, primarily use billpay service from bank account.
Have used the link between Vanguard account and my bank account to transfer money by ACH for years seamlessly, at least one every couple weeks, always initiate at Vanguard through habit. Never takes more than two business days, sometimes only one, and have never experienced limits on amount transferred. Good luck.

User avatar
munemaker
Posts: 3408
Joined: Sat Jan 18, 2014 6:14 pm

Re: Vanguard electronic bank transfers

Post by munemaker » Thu Sep 13, 2018 8:57 am

yardarm wrote:
Tue Sep 11, 2018 10:02 am
What are the pros and cons of either opening a check writing account with Vanguard or establishing a link between Vanguard and a bank or credit union?
The pros are you can easily move money from Vanguard to your bank or vice versa. I am retired and living off of my portfolio. Using ACH, I move money from my investment accounts to my bank to pay expenses or possibly buy a bank CD. Actually I have a bank and credit union linked to Vanguard. You can link as many banks/CUs as you want to.

Another pro is you can move large amounts of money in and out of Vanguard via ACH. Banks typically have low limits on transferring money out of their institution.

The only con I see to the bank transfers is it takes Vanguard about a week to set up the link to a bank in their system. The little thing they do exchanging a few cents with your account takes a day. I don't know what they do for the rest of the week...whether it sets on someone's desk waiting for someone to push a button, or whether there is a team of employees working frantically around the clock to get the link set up.
yardarm wrote:
Tue Sep 11, 2018 10:02 am
I believe that I read a post that stated transfer action must initiate with Vanguard (push/pull) and not the bank or credit union. Is this correct and is this a security protocol of Vanguard?
The reason you have to initiate the transaction from Vanguard is they are not a bank. They do not have a routing number, the electronic address used for bank transfers. You need a routing number to set up ACH transfers that would initiate at your bank.

User avatar
Doc
Posts: 8511
Joined: Sat Feb 24, 2007 1:10 pm
Location: Two left turns from Larry

Re: Vanguard electronic bank transfers

Post by Doc » Thu Sep 13, 2018 9:56 am

munemaker wrote:
Thu Sep 13, 2018 8:57 am
The reason you have to initiate the transaction from Vanguard is they are not a bank. They do not have a routing number, the electronic address used for bank transfers. You need a routing number to set up ACH transfers that would initiate at your bank.
But they do have a correspondent bank that handles for example direct deposits. Many people use that for paychecks or SS but you can use it for other things. For example I frequently transfer money from Schwab to VBS in this way. Money is at VBS the at start of business the next business day with a margin account or 2nd day from a mutual fund.

I don't remember if this applies to a mutual fund only account but I think it does because the corespondent bank changed when we upgraded.

If I'm moving money from one of our banks to VBS I initiate from VBS since I have the money "available to trade" as soon as the screen refreshes.
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.

criticalmass
Posts: 579
Joined: Wed Feb 12, 2014 10:58 pm

Re: Vanguard electronic bank transfers

Post by criticalmass » Fri Sep 14, 2018 10:35 am

munemaker wrote:
Thu Sep 13, 2018 8:57 am
yardarm wrote:
Tue Sep 11, 2018 10:02 am
What are the pros and cons of either opening a check writing account with Vanguard or establishing a link between Vanguard and a bank or credit union?
The pros are you can easily move money from Vanguard to your bank or vice versa. I am retired and living off of my portfolio. Using ACH, I move money from my investment accounts to my bank to pay expenses or possibly buy a bank CD. Actually I have a bank and credit union linked to Vanguard. You can link as many banks/CUs as you want to.

Another pro is you can move large amounts of money in and out of Vanguard via ACH. Banks typically have low limits on transferring money out of their institution.

The only con I see to the bank transfers is it takes Vanguard about a week to set up the link to a bank in their system. The little thing they do exchanging a few cents with your account takes a day. I don't know what they do for the rest of the week...whether it sets on someone's desk waiting for someone to push a button, or whether there is a team of employees working frantically around the clock to get the link set up.
yardarm wrote:
Tue Sep 11, 2018 10:02 am
I believe that I read a post that stated transfer action must initiate with Vanguard (push/pull) and not the bank or credit union. Is this correct and is this a security protocol of Vanguard?
The reason you have to initiate the transaction from Vanguard is they are not a bank. They do not have a routing number, the electronic address used for bank transfers. You need a routing number to set up ACH transfers that would initiate at your bank.
When an ACH transfer occurs, the process needs a routing number at both ends. The vanguard account has a routing number from vanguard's bank.


Separately, if you use vanguard advantage, you can ach to and from your vanguard account using the routing number on your vanguard checks.

Post Reply