When I bill pay to payee my account is debited right away and then it can take up to 5 days for check to be recieved and cashed by payee. Where is this money for 5 days and who is using it? If is sent electronically there is a 3 day lag from debit to deposit by the payee. I assume ACH to payee account. Where is this money debited from my account? Can the bank use this money some how?
Electronic bill pay
Answers
Once the bank debits your account those funds are in the bank's name until payment. At today's really, really low interest rates, this is not a goldmine, but do the math if you want to estimate the effect. But also factor in the bank's costs related to this, such as reconcilement, which is not free.
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Accounting