How to avoid the cost, hassle, and delays caused by ACH reversals
Like many businesses in the US, MyConstant uses the Automated Clearing House (ACH) to move funds between your bank and your MyConstant account — reliably and inexpensively.
However, when certain information is inaccurate or not properly authorized, an ACH reversal will occur — costing you money and slowing the transfer process.
How to avoid ACH reversals
Below is a check list of the most important points you must remember when you initiate an ACH transfer.
- Link a bank account that supports ACH. Not all banks do – some only support wire. Wires are not the same as ACH so make sure your bank supports ACH.
- Keep enough money in your account to fulfill the transfer for at least 48 hours after your ACH request. If you withdraw after creating your deposit request, that’s okay, just make sure you have enough left over to cover the transfer.
- Link a checking account, not a savings account. Savings accounts often have limits on withdrawals. Best to only link a savings account so you don’t get charged a reversal fee.
- Ensure your deposit amount is less than 70% of your available bank balance for the duration of the transfer. In other words, if you have a bank balance of $1,000 you can only deposit up to $699. Important: please ensure your balance stays within this limit until your ACH settles otherwise it’ll be reversed.
Updated fees and new transfer limits when using ACH
As of March 2nd of this year, the penalty fees for ACH reversals have increased up to $50. On top of that, you also risk having your account suspended. Please note that these fees are not from MyConstant, but from our ACH partner which we’re liable for.
If your ACH is reversed and funds are sent back, you’ll get an email from our customer service team to figure out together what went wrong.
The following is an updated list of ACH reversal fees:
- 1st reversal — a $20 fee.
- 2nd reversal — a $30 fee.
- 3rd reversal — a $50 fee.
Another ACH update is that you can only deposit an amount less than 70% of your available bank balance for the duration of the transfer. For example, if you have $10,000 in your bank account, you can only deposit $7,000 into your MyConstant account. If you try to deposit $7,010, a screen will appear stating you have ‘insufficient funds.’
In most instances, this won’t cause an ACH reversal. But if you have enough funds when you create the order, but not enough when the bank processes the order, it will lead to a reversal.
What to remember before initiating an ACH transfer
ACH reversals happen for a variety of reasons so it’s important you ask yourself the following questions before initiating an ACH transfer:
- Have I made duplicate transactions?
- Is my bank account frozen?
- Is the account closed?
- Have I cancelled any transfers?
- Does my bank support ACH?
While the questions above will likely result in an ACH reversal, the most common reason is that there are insufficient funds in the bank account.
Oftentimes the reason for having insufficient funds is unintentional. For example, you might think you have enough money to make an ACH transfer but your automatic credit card or phone bill payment kicks in and withdraws some of your money. This might make your transfer amount off by a few dollars or cents — causing an ACH reversal.
On the other end, you might see that you have money — perhaps a paycheck — waiting to arrive in your account. It’s important that you wait until the money is absolutely there before initiating the transfer. If the transfer goes through quickly, and your funds aren’t there, an ACH reversal will occur.
In order to steer clear from an ACH reversal please ensure you do the following:
- Link a bank account that supports ACH.
- Have enough money in your account to fulfill the transfer for at least 48 hours after your ACH request.
- Link a checking account, not a savings account, to avoid any withdrawal limits.
- Ensure your deposit amount is less than 70% of your available bank balance for the duration of the transfer.
No one likes paying extra fees — especially when they’re easily avoided. If you double check the points above you’ll have no problems moving money between your accounts. If you have any questions about ACH reversals, don’t hesitate to contact us at [email protected]
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