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?
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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