BofA - Am I Shadow-Loaning to Them?

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watchnerd
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BofA - Am I Shadow-Loaning to Them?

Post by watchnerd » Tue Sep 18, 2018 12:42 am

So we're all aware that once upon a time, savings deposits were used to fund loans that banks loaned out, i.e. pay 2% interest on the savings, loan it out at 4.5%, make money on the spread.

(Or at least it used to be, it's probably something much more esoteric now)

But in my Bank of America I've noticed that my debits are instantaneous, but my credits are not.

Example:

If I do a 'within bank' transfer to pay down my credit card (before the bill is even crated), from checking to the credit card, the debit to my checking account is instantaneous.

But the credit to the credit card is delayed....sometimes as much 1-3 days.

Am I basically making shadow microloans to BofA, giving them free money (without compensation) to use for a few days?

Or am I being unfair and paranoid?
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tfb
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Re: BofA - Am I Shadow-Loaning to Them?

Post by tfb » Tue Sep 18, 2018 12:49 am

watchnerd wrote:
Tue Sep 18, 2018 12:42 am
Or am I being unfair and paranoid?
Yes. B of A uses a bill pay provider between their banking side and their credit card side. The bill pay provider has to get the money from the banking side first and then pay the credit side. If you use B of A bill pay to pay a Chase credit card, the process is the same. They just treat B of A credit card as any other credit card.
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watchnerd
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Re: BofA - Am I Shadow-Loaning to Them?

Post by watchnerd » Tue Sep 18, 2018 12:55 am

tfb wrote:
Tue Sep 18, 2018 12:49 am
watchnerd wrote:
Tue Sep 18, 2018 12:42 am
Or am I being unfair and paranoid?
Yes. B of A uses a bill pay provider between their banking side and their credit card side. The bill pay provider has to get the money from the banking side first and then pay the credit side. If you use B of A bill pay to pay a Chase credit card, the process is the same. They just treat B of A credit card as any other credit card.
I'm not talking about Bill Pay.

I'm talking about Transfer.
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Re: BofA - Am I Shadow-Loaning to Them?

Post by drawpoker » Tue Sep 18, 2018 12:57 am

watchnerd wrote:
Tue Sep 18, 2018 12:42 am
.....once upon a time, savings deposits were used to fund loans that banks loaned out, i.e. pay 2% interest on the savings, loan it out at 4.5%, make money on the spread....
You have it a little mixed up.

The actual economic doctrine is that well-known, time-honored, indisputable tradition, otherwise known as the "3-6-3" rule of banking industry.

Pay 3% on savings, lend money out at 6%, and be out the door at 3 PM for the golf course.

Just adjust the figures to fast forward from 1960 to 2018.

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Re: BofA - Am I Shadow-Loaning to Them?

Post by tfb » Tue Sep 18, 2018 1:02 am

watchnerd wrote:
Tue Sep 18, 2018 12:55 am
tfb wrote:
Tue Sep 18, 2018 12:49 am
watchnerd wrote:
Tue Sep 18, 2018 12:42 am
Or am I being unfair and paranoid?
Yes. B of A uses a bill pay provider between their banking side and their credit card side. The bill pay provider has to get the money from the banking side first and then pay the credit side. If you use B of A bill pay to pay a Chase credit card, the process is the same. They just treat B of A credit card as any other credit card.
I'm not talking about Bill Pay.

I'm talking about Transfer.
When the transfer crosses from the banking side to the credit card side, it's processed by the bill pay provider.
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watchnerd
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Re: BofA - Am I Shadow-Loaning to Them?

Post by watchnerd » Tue Sep 18, 2018 1:06 am

tfb wrote:
Tue Sep 18, 2018 1:02 am
watchnerd wrote:
Tue Sep 18, 2018 12:55 am
tfb wrote:
Tue Sep 18, 2018 12:49 am
watchnerd wrote:
Tue Sep 18, 2018 12:42 am
Or am I being unfair and paranoid?
Yes. B of A uses a bill pay provider between their banking side and their credit card side. The bill pay provider has to get the money from the banking side first and then pay the credit side. If you use B of A bill pay to pay a Chase credit card, the process is the same. They just treat B of A credit card as any other credit card.
I'm not talking about Bill Pay.

I'm talking about Transfer.
When the transfer crosses from the banking side to the credit card side, it's processed by the bill pay provider.
Huh....okay, even so, it's not the 1970s.

I can't see any technology reason why it should be so slow.
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damjam
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Re: BofA - Am I Shadow-Loaning to Them?

Post by damjam » Tue Sep 18, 2018 1:08 am

watchnerd wrote:
Tue Sep 18, 2018 12:42 am
So we're all aware that once upon a time, savings deposits were used to fund loans that banks loaned out, i.e. pay 2% interest on the savings, loan it out at 4.5%, make money on the spread.

(Or at least it used to be, it's probably something much more esoteric now)
It's my understanding that retail banks like BofA, Chase and the like, make a substantial portion of their revenues from fees.
Try reading something like "The Unbanking of America: how the new middle class survives," by Lisa Servon to get an idea of how damaging fees can be to ordinary savers.

More directly to your question; I don't think your paranoid at all. Banks, insurance companies, etc always make money on the float. If BofA isn't making money on the float the bill pay provider is. I imagine if BofA doesn't own the bill pay provider outright, that BofA at least has some sort of beneficial arrangement with it.

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Re: BofA - Am I Shadow-Loaning to Them?

Post by dodecahedron » Tue Sep 18, 2018 3:45 am

I get same day credit whether I use BoA billpay OR transfer to pay my BoA credit card bills. There is even very explicit language on website that same-day credit will be given (e.g. for purposes of computing interest charges or late fees) as long as bill pay or transfer request is made by 11:59 pm.

There is a warning that it might take a few days to post but it also explicitly says that the transaction date will be the date requested.

With billpay, I do have to explicitly tell BoA I want the funds delivered on earliest possible day (today). With transfer it just automatically defaults to today.

I did an experiment just now. Payment immediately posted to credit card account with annotation ¨pending¨ and todayś date. Also still listed as ¨pending,¨ but with Saturday´s date is a purchase I made on Saturday. I expect both pending annotations disappearing within a day or so, but transaction dates will remain.

student
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Re: BofA - Am I Shadow-Loaning to Them?

Post by student » Tue Sep 18, 2018 6:40 am

I paid my credit card yesterday via transfer and it was posted to the credit card as pending with yesterday as the transaction date.

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Re: BofA - Am I Shadow-Loaning to Them?

Post by ResearchMed » Tue Sep 18, 2018 6:47 am

dodecahedron wrote:
Tue Sep 18, 2018 3:45 am
I get same day credit whether I use BoA billpay OR transfer to pay my BoA credit card bills. There is even very explicit language on website that same-day credit will be given (e.g. for purposes of computing interest charges or late fees) as long as bill pay or transfer request is made by 11:59 pm.

There is a warning that it might take a few days to post but it also explicitly says that the transaction date will be the date requested.

With billpay, I do have to explicitly tell BoA I want the funds delivered on earliest possible day (today). With transfer it just automatically defaults to today.

I did an experiment just now. Payment immediately posted to credit card account with annotation ¨pending¨ and todayś date. Also still listed as ¨pending,¨ but with Saturday´s date is a purchase I made on Saturday. I expect both pending annotations disappearing within a day or so, but transaction dates will remain.
With BoA billpay there are two choices, but they make one of them opaque. (This is as it was until about 2-3 years ago; might have changed?)

The first way (the default, as in "default to BoA's benefit") is... when the check is sent, the money is debited from your account.
To select the other way is tricky; we needed to have telephone support make the change although that's not supposed to be necessary. THAT way, the money isn't debited from your account until the check is actually presented/cashed.

Why? "It's for YOUR benefit", the kindly BoA souls insisted.
"Customers tend to forget they wrote the checks, and then when a delayed check is cashed, the account is overdrawn, so we do this for *YOUR* VERY OWN BENEFIT!"
Right.

Note: If the already debited check isn't cashed within something like 90 or 180 days (I've forgotten), then - and only then - will they put the money back in your account.

The "second way" actually allows you to see when the check is presented for payment/cashed, which can be handy!

RM
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