TradeKing Changed ACH Deposit Hold and Withdrawal Policy

It seems that TradeKing (check out TradeKing reviews and interview with CEO Montarano for more on TradeKing) has made some changes on their ACH policy. I first saw the discussion on FatWallet forum early last week about TradeKing’s increased ACH period. At that time, the ACH deposit policy looks like this:

ACH Deposits
- 5 business days to clear for trading
- 60 business days from date of deposit to release funds from the account – return funds via ACH only

60 business days to release funds? That’s like what, three months? I don’t know the reason behind these changes, but 60 business days seem awfully long for any reason.

Anyway, with the help from Sue Parente at Tier One, I got the chance to ask TradeKing to explain their new policy a little bit to clear up the confusion. Last Friday, John Dominic, VP of Brokerage Operations at TradeKing, responded my request:

Sun -

Thank you for your inquiry and offer to help clarify for your blog readers our policy with regard to ACH deposits. It is true that we have featured some inconsistent language on the site in recent weeks on this matter in the “Funds Available” section and we sincerely apologize for this. We would like you and your readers to know that we have changed the specifics of our policy today with the intention of making it clear, fair and consistent for every client across the board. In short, after further reviewing our existing policy, we have decided to increase the general hold time on ACH withdrawals from 30 to 60 days. We’ve done this to ensure funds are properly cleared and to help protect both clients and TradeKing from overdrafts as well as any potentially fraudulent activity in the account. Please note that trading activity on those funds is permitted within five business days after the date of transfer and that TradeKing does not benefit monetarily in any way from this extended hold time on withdrawals. It is purely intended as a preventative measure against fraud and money-laundering schemes.

So basically, the policy is aimed to prevent fraud and money-laundering. While I don’t question the motivation to extend the ACH hold period, still 60 days are excessive. As far as I know, there isn’t any other broker hold fund for this long. Not even banks. Right now the ACH policy at TradeKing is as follows:

ACH Deposits
- 5 business days to clear for trading
- ACH deposits must remain in your account for a minimum of 10 business days prior to withdrawal for clearance purposes and may only be withdrawn via ACH to the bank account of origin. Withdrawals of ACH deposits via check, wire or Account Transfer may only be made after 60 calendar days from the date of deposit. Other restrictions may apply if fraud or other potential anti-money laundering concerns are raised.

When I ACH funds to my brokerage accounts, I usually use them immediately after they are cleared. And there were only a few occasions when I actually needed to transfer money out. So I don’t think this policy will affect me that much.

Will you continue to do business with TradeKing as usual after the change?

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4 Responses to “TradeKing Changed ACH Deposit Hold and Withdrawal Policy”

  1. archie |  Jan 18, 2010 at 4:43 am

    No, its because the longer they hold on to your money, the more they make in interest.

    This is a way for low-cost brokerages to make money. Generally, the lower the commission schedule, the longer it takes to get your money out.

    Something to think about in turbulent financial times. If it suits them, they can decree 180 days or 360 (you’ve already accepted an absurd 60 days) — and if the market is difficult enough for operations, don’t expect anymore than “we’re working on it … one of these months…) . What are you going to do about it?

  2. Hondaddy |  Feb 23, 2010 at 1:55 pm

    I am currently beginning the 60 day headlock. After speaking with a TradeKing associate, I found the 60 days in the fine print. I asked for the “basis” of this unorthodox length of time. He replied “this is our normal procedure”.
    I asked if he knew of any other financial institution with this time frame. Dead air on the phone. I even offered to wire them the full amount of the value of the account, then allow them to transfer everything to Scottrade, and I would wait for a check in the mail for the amount of the wire. They said NO! I will recommend TradeKing to anyone.

  3. SB |  Mar 22, 2010 at 3:41 pm

    I challenge their statement that “TradeKing does not benefit monetarily in any way from this extended hold time on withdrawals”.

    On their website, they clearly state in several areas that they sweep your funds overnight through Legent Clearing. In that sweep arrangement, which is the default option for brokerage accounts, TradeKing makes money on the funds placed in the program banks. So while you personally do not pay them to hold your money, they are benefiting monetarily (to the stated tune of .5% – 6%) from the nightly placement of your funds. I pasted a link to the disclosure document below. For those wishing to confirm my statements, special attention should be paid to the sections titled “Program Compensation” and “Deposits”.

    http://content.tradeking.com/wiki/download/attachments/3641/20081221+Insured+Terms+and+Conditions.pdf?version=1

    or

    http://www.legentclearing.com/pdf/InsuredTermsConditions.pdf

  4. localguy |  Sep 17, 2010 at 12:22 pm

    I made one trade on TradeKing and that was it. I just couldn’t handle the 5-day ACH clearing period(which is actually 7-days when factoring in non-business days), and didn’t want to wait months to have funds transfered back to my bank account in case of an emergency.