Attributes of an Excellent Hub Bank Account
Attributes of an Excellent Hub Account For Online Banking
Use of multiple accounts that reside in various banks and credit unions can be leveraged with a hub account. Money transfers between the other accounts are easier when a hub account acts as the central repository. Internet banks provide bank-to-bank transfers for funds as part of their electronic funds transfer, or EFT, service. The Automated Clearing House, also called ACH, network facilitates these transfers between banking institutions.
Traditional banks and credit unions are less likely to offer ACH transfer service to customers. While some institutions do not have the capability to offer ACH transfer services, others offer the service with extensive limitations. When the primary checking or savings account resides at one of these institutions, the hub account can provide funds transfer services.
If, for example, one savings account resides at a credit union with favorable CD rates, the account owner can transfer funds from another bank into the hub account. Then the funds are transferred into the credit union savings account to make the money available for the purchase of CDs. The CD can be opened over the credit union website or on the phone. Once the CD matures, the funds can be transferred to the savings account. If the accountholder would like to move the money to another institution, the funds are transferred to the hub account for easy movement.
Banks offer checking accounts that offer rewards for high balances, but many of these accounts must be fed through direct deposit or ACH transfers. Automated monthly fund transfers from the hub account can fulfill this requirement for reward checking accounts.
Required Attributes of the Hub Account
Banks that provide ACH service will not offer the most important features for a hub account. Each of the attributes listed below are required to utilize the hub account fully.
1. ACH transfers without fees – Moving funds between traditional banks can be very costly since most brick-and-mortar institutions charge for each transaction. Internet banks will provide ACH transfer services free of charge.
2. Unlimited Linked Accounts – Hub accounts must be linked to other savings and checking accounts to be useful. An institution that does not limit the number of accounts that can be linked will be the most useful option.
3. Easy account setup – Links between the hub account and the other accounts is completed by providing the routing number and account number to the bank where the hub account resides. Trial deposits are performed to verify the validity of the numbers provided. In an effort to reduce the risk of fraud, some institutions will require that a single voided check is sent through the mail.
4. Links to checking or savings accounts – Some banks limit the links to checking accounts only.
5. Rapid ACH transfer service – One of the reasons to use a hub account is to save time, so the institution should offer fast transfers. If the transfers will take more than one business day, the use of a hub account becomes a bottleneck instead of a conduit.
6. Minimal delay to prevent lost interest – When ACH transfers take multiple business days, interest earned will be lost. This can be very costly when large sums of money are moved between the hub account and others.
7. No hold times – Placing a hold on the funds deposited in an account is a common practice in traditional banks. Long hold periods can cause significant difficulty in the effort to manage large sums of money. Money transfers are more difficult if the bank does not allow the funds to be immediately available. The hub account cannot have a hold time for deposits because that works against the purpose of the hub account.
8. Transfers of large sums – When the amount of money that can be transferred is limited, the hub account is more difficult to utilize fully. Some banks limit the size of the transfer amounts to less than $2,000.
9. Withdrawal transaction limits – Federal regulations limit the number of withdrawal transactions from a savings account or money market account to six ACH withdrawals per month. Deposit transactions are not limited on savings or money market accounts. Checking account withdrawals are not limited by this law.
10. No minimum balance required – Hub accounts should not require a certain minimum balance because that ties up funds that can be used elsewhere.
Maintaining a hub account can facilitate management of other bank accounts. Savings, checking and money market accounts can be accessed without extensive effort when the hub account offers this list of features. Careful management of the hub account can save time and be used to keep accounts from incurring fees for inactivity. CheckingAccount.com offers accounts that can be used as a hub with all of the most useful attributes for all banking needs.