At least where I live, if I make a transfer between my accounts (with different banks) too late on a Friday, the money won’t be available until Monday. But there are no humans involved in this process – it seems to me that could be instantaneous as far as the technology is concerned. What am I missing?
In: 1897
The technical term is “making money on the float.” When you, for instance, pay off your credit card by transferring money from checking, the money leaves your checking account immediately for the bank to hold, but the credit card does not update until the next business day.
The reason for this is that the float, that money the bank holds, the bank is able to make interest on. For this reason, Banks have no financial motivation to speed up this process despite it being technically possible.
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