Why does ACH to Fido take 7 days to clear?

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vu8
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Why does ACH to Fido take 7 days to clear?

Post by vu8 »

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https://imgur.com/hHBmKKy
I am not a new customer with Fido, and I am not using checks or other formats of payments, just plan vanilla EFT transfers.

I have made multiple transfers of such in the past, it has always taken 7 days to clear, when there're holidays it can even take a couple days longer than 7 days.

How fast do your brokerages clear EFT cash deposits? I know for a fact that you can usually trade the cash you deposited with Schwab the day after, and you can buy Vanguard funds as soon as you deposited the cash balance on Vanguard. Why does Fido take so stupidly long to make cash available?
DSInvestor
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Re: Why does ACH to Fido take 7 days to clear?

Post by DSInvestor »

I believe you are looking at a delay before Fidelity will allow you to withdraw that money that you deposited by ACH. That money should be available to trade sooner than that.

I believe Vanguard has similar restrictions.
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JoMoney
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Re: Why does ACH to Fido take 7 days to clear?

Post by JoMoney »

What account are you initiating from? When I initiate an ACH transfer to Fidelity (at the Fidelity account, telling them to transfer from a linked account) the funds are immediately available for purchases/trade, just not withdrawal.
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vu8
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Re: Why does ACH to Fido take 7 days to clear?

Post by vu8 »

JoMoney wrote: Tue Jul 20, 2021 11:40 pm What account are you initiating from? When I initiate an ACH transfer to Fidelity (at the Fidelity account, telling them to transfer from a linked account) the funds are immediately available for purchases/trade, just not withdrawal.
Yes I checked again the entire balance is indeed available to trade, just not available to withdraw.
Are there brokerages that makes it sooner for investors to be able to withdraw the money they just deposited? I mean Fidelity does seem to put the deposit into the CORE Sweep account as soon as the money arrives, just that it would make withdrawal difficult due to the 7 day long restrictions.
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vu8
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Re: Why does ACH to Fido take 7 days to clear?

Post by vu8 »

DSInvestor wrote: Tue Jul 20, 2021 11:40 pm I believe you are looking at a delay before Fidelity will allow you to withdraw that money that you deposited by ACH. That money should be available to trade sooner than that.

I believe Vanguard has similar restrictions.
Yes you are right, the funds that I was questioning for was indeed available for trade, but not for withdrawal. However it is still a long wait for the cash that the investor has just deposited to be available to be withdrawn.
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retired@50
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Re: Why does ACH to Fido take 7 days to clear?

Post by retired@50 »

vu8 wrote: Tue Jul 20, 2021 11:46 pm
DSInvestor wrote: Tue Jul 20, 2021 11:40 pm I believe you are looking at a delay before Fidelity will allow you to withdraw that money that you deposited by ACH. That money should be available to trade sooner than that.

I believe Vanguard has similar restrictions.
Yes you are right, the funds that I was questioning for was indeed available for trade, but not for withdrawal. However it is still a long wait for the cash that the investor has just deposited to be available to be withdrawn.
Why would you want to withdraw cash from Fidelity that you just deposited at Fidelity?

If you want the money in your linked bank account, then just leave it there. I don't see any point in "round-tripping" the money.

Regards,
This is one person's opinion. Nothing more.
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vu8
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Re: Why does ACH to Fido take 7 days to clear?

Post by vu8 »

retired@50 wrote: Tue Jul 20, 2021 11:49 pm Why would you want to withdraw cash from Fidelity that you just deposited at Fidelity?

If you want the money in your linked bank account, then just leave it there. I don't see any point in "round-tripping" the money.

Regards,
So many people use their Fido brokerage account as a checking account, and sometimes people who have less available financial resources would need to deposit the money and then expect to spend that money or withdraw from ATMs as soon as possible or in a couple of days. With Fido's 7+ day restrictions it makes day to day transactions and money management much more complicated for individuals who use Fido as an online checking account.
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JoMoney
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Re: Why does ACH to Fido take 7 days to clear?

Post by JoMoney »

I know direct deposits into my Fidelity account are available for withdraw immediately (often the day before the DD was supposed to be there).
I'm pretty sure if the transfer is initiated from the bank sending the money it's available sooner as well, and I believe that's pretty commonly the case, I believe when they money is pulled from another bank they have the opportunity to cancel/reverse the transfer within a few days, if Fidelity allowed the money to be withdrawn immediately it could leave them holding an empty bag.
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retired@50
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Re: Why does ACH to Fido take 7 days to clear?

Post by retired@50 »

vu8 wrote: Tue Jul 20, 2021 11:55 pm
retired@50 wrote: Tue Jul 20, 2021 11:49 pm Why would you want to withdraw cash from Fidelity that you just deposited at Fidelity?

If you want the money in your linked bank account, then just leave it there. I don't see any point in "round-tripping" the money.

Regards,
So many people use their Fido brokerage account as a checking account, and sometimes people who have less available financial resources would need to deposit the money and then expect to spend that money or withdraw from ATMs as soon as possible or in a couple of days. With Fido's 7+ day restrictions it makes day to day transactions and money management much more complicated for individuals who use Fido as an online checking account.
Seems like the simple solution is to use a local bank or credit union with free checking and ATM access and skip the notion of trying to turn Fido into a corner bank.

Regards,
Last edited by retired@50 on Wed Jul 21, 2021 10:19 am, edited 1 time in total.
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babystep
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Re: Why does ACH to Fido take 7 days to clear?

Post by babystep »

ok, this is good to know. Let us start the transfer 7 days before we need it :wink:

or directly deposit into fidelity account instead of an extra hop?
nalor511
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Re: Why does ACH to Fido take 7 days to clear?

Post by nalor511 »

VG and Fido have the same restriction on withdrawal, but you can trade instantly. Schwab has a 7 day restriction on even trading.
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Re: Why does ACH to Fido take 7 days to clear?

Post by RetiredAL »

nalor511 wrote: Wed Jul 21, 2021 1:04 am VG and Fido have the same restriction on withdrawal, but you can trade instantly. Schwab has a 7 day restriction on even trading.
That has NOT been my experience with Schwab. I've done ACH pull from Wells Fargo for $100K+ and it was immediately available to trade and I traded on it the next day.

Schwab does say a new bank linkage can take up to 7 days, but a recent one (18 months ago) was linked and ready to go in 3 days.
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Re: Why does ACH to Fido take 7 days to clear?

Post by tomsense76 »

vu8 wrote: Tue Jul 20, 2021 11:45 pm
JoMoney wrote: Tue Jul 20, 2021 11:40 pm What account are you initiating from? When I initiate an ACH transfer to Fidelity (at the Fidelity account, telling them to transfer from a linked account) the funds are immediately available for purchases/trade, just not withdrawal.
Yes I checked again the entire balance is indeed available to trade, just not available to withdraw.
Are there brokerages that makes it sooner for investors to be able to withdraw the money they just deposited? I mean Fidelity does seem to put the deposit into the CORE Sweep account as soon as the money arrives, just that it would make withdrawal difficult due to the 7 day long restrictions.
I think this is not a Fidelity specific thing. More generally this something that other brokerages and banks do.

For example, from Vanguard's help (emphasis mine):
Funds transferred from your bank via electronic bank transfer may be used immediately to buy Vanguard mutual funds. However, redemption proceeds may not be available for you to withdraw for up to seven calendar days.
From Schwab's FAQs:
Schwab Brokerage Accounts—Generally, electronic deposits and incoming wires to your Schwab brokerage account are available for same day trading. In some instances, however, incoming deposits may not be immediately used for certain securities and are subject to a holding period of up to five business days.
Schwab Bank Accounts—Generally, deposited cash and checks are available on the first business day after we receive your deposit. If you enrolled in our Electronic Fund Transfer (EFT) service, your Schwab Bank deposits are subject to a four-business-day hold and you may not withdraw pending funds during the holding period. For newly opened accounts, Schwab Bank may hold certain deposit types until the fifth business day after the day of the deposit. You can view a detailed explanation of new client hold times here.
Finally would add that these availability limits are likely a function of how funds were added to the account, which then are in turn are governed by Federal regulations. See this WalletHub article, which in turn points to Regulation CC (Availability of Funds and Collection of Checks).

Based on reading these it's not clear to me that institutions need to wait so long to process transactions (simply that they are allowed to). IOW the law sets an upper bound in processing time and financial institutions seem to be following that to the letter. The flipside of that is one would not want a transaction they did not authorize (in other words a fraudulent one) to process quickly.
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galawdawg
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Re: Why does ACH to Fido take 7 days to clear?

Post by galawdawg »

vu8 wrote: Tue Jul 20, 2021 11:46 pm
DSInvestor wrote: Tue Jul 20, 2021 11:40 pm I believe you are looking at a delay before Fidelity will allow you to withdraw that money that you deposited by ACH. That money should be available to trade sooner than that.

I believe Vanguard has similar restrictions.
Yes you are right, the funds that I was questioning for was indeed available for trade, but not for withdrawal. However it is still a long wait for the cash that the investor has just deposited to be available to be withdrawn.
But you aren't depositing cash. You are doing an ACH transfer which generally takes three to four business days to clear.

On Monday you make an ACH transfer request. The first business day (Tuesday) when the transfer is initiated. Then, the Receiving Depository Financial Institutions (RDFI) has 48 hours from the time the ACH transaction was originated in order to notify Fidelity of any return codes (Thursday). Then if no return codes are pulled by the end of that period, the funds associated with the ACH debit are considered "settled" and are made available the following business day (Friday in this case).

These are rules established by NACHA and are common to ACH transfers between financial institutions. Some exceptions are made for certain "same-day" available ACH credits, such as payroll Direct Deposits. Eventually ACH transfers between accounts owned by the same customer may fall under that umbrella but currently most of those ACH transfers are subject to the current rules on fund availability on the first business day after settlement by RDFI.

Fidelity lets you trade with the funds immediately because they can reverse the trade if the funds do not clear (and while you can trade, you cannot sell and withdraw the proceeds before the ACH transfer clears to skirt that hold period). If you have a more immediate need for the funds then you should either initiate the ACH transfer ahead of time, withdraw the funds or pay your bills directly from your other financial institution, or open a Fidelity cash management account and use that in addition to, or in lieu of, your other financial institution.
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Re: Why does ACH to Fido take 7 days to clear?

Post by RickBoglehead »

This ^^^
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HomeStretch
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Re: Why does ACH to Fido take 7 days to clear?

Post by HomeStretch »

As noted above, ACHs initiated at the receiving financial institution (Fidelity and others) take time to clear.

To shorten the time, you can initiate the ACH from the sending institution. To shorten the time further, you can wire funds (wires-in are free at Fidelity, check if the sending party charges wire fees).

Another option is to rethink transferring funds and trying to immediately withdraw the funds. Now that you are aware of the ACH hold times, perhaps there is another process you can use to make the funds available when you need them.
Last edited by HomeStretch on Wed Jul 21, 2021 6:31 am, edited 1 time in total.
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Re: Why does ACH to Fido take 7 days to clear?

Post by UpperNwGuy »

vu8 wrote: Tue Jul 20, 2021 11:33 pm How fast do your brokerages clear EFT cash deposits? I know for a fact that you can usually trade the cash you deposited with Schwab the day after, and you can buy Vanguard funds as soon as you deposited the cash balance on Vanguard. Why does Fido take so stupidly long to make cash available?
I have accounts at all three brokerages that you listed, and they all handle ACH transfers-in very similarly, so I don't understand your question. I think you are misinterpreting something on Fidelity's website because they don't take longer than the others. What exactly are you trying to do at Fidelity?
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Re: Why does ACH to Fido take 7 days to clear?

Post by ryman554 »

retired@50 wrote: Tue Jul 20, 2021 11:49 pm
Why would you want to withdraw cash from Fidelity that you just deposited at Fidelity?

If you want the money in your linked bank account, then just leave it there. I don't see any point in "round-tripping" the money.

Regards,
My particular beef is that it (slighlty) delays the ability to to a backdoor roth.

You can deposit into a tIRA, but you can't convert until you are able to withdraw.
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Re: Why does ACH to Fido take 7 days to clear?

Post by BolderBoy »

Push vs Pull ACH transactions? All the following comments concern ACH transfers.

I've noticed that funds sent via a push tend to be available right away but funds received via a pull require some days to clear.

For example, SS payments are sent via a push and are generally available immediately. When I transfer funds from my VG account to my local checking account via a push the funds are available the next day, usually. But if I transfer funds from my local checking account to VG via a pull they don't clear for 7 days.
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Leif
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Re: Why does ACH to Fido take 7 days to clear?

Post by Leif »

vu8 wrote: Tue Jul 20, 2021 11:55 pm
retired@50 wrote: Tue Jul 20, 2021 11:49 pm Why would you want to withdraw cash from Fidelity that you just deposited at Fidelity?

If you want the money in your linked bank account, then just leave it there. I don't see any point in "round-tripping" the money.

Regards,
So many people use their Fido brokerage account as a checking account, and sometimes people who have less available financial resources would need to deposit the money and then expect to spend that money or withdraw from ATMs as soon as possible or in a couple of days. With Fido's 7+ day restrictions it makes day to day transactions and money management much more complicated for individuals who use Fido as an online checking account.
Exactly right. Fidelity is my checking account. But, the MM earnings at 0.01% is not as good as the 0.50% I can get at a high yield account. If I need additional money at Fidelity for checking then I plan in advance, as you say around 7 days.

However, in my experience, push works faster than pull to get money to Fidelity. So doing a push from a HYS account to Fidelity is ready in a couple of days to withdraw.
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Re: Why does ACH to Fido take 7 days to clear?

Post by nalor511 »

RetiredAL wrote: Wed Jul 21, 2021 1:36 am
nalor511 wrote: Wed Jul 21, 2021 1:04 am VG and Fido have the same restriction on withdrawal, but you can trade instantly. Schwab has a 7 day restriction on even trading.
That has NOT been my experience with Schwab. I've done ACH pull from Wells Fargo for $100K+ and it was immediately available to trade and I traded on it the next day.

Schwab does say a new bank linkage can take up to 7 days, but a recent one (18 months ago) was linked and ready to go in 3 days.
That's great news, then it sounds like the top 3 (F, V, S) all let you trade instantly on a pending ACH. Long story short, the Subject line of this thread is moot.
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