American Bankers Association (ABA) created a routing number to help in restructuring the exchange of paper checks on a substantial scale. They are widely known as ABA routing numbers or American Clearing House (ACH) routing numbers. If you would love to know more about the routing numbers, then, this article is for you.
What is a Routing Number?
A routing number comprises a nine-digit code used for identifying different financial institutions in the United States. That is, each financial institution has one assigned to it.
To be more practical, it plays a significant role in ensuring that your money arrives in the right place. Therefore, when you enter it together with a payee’s account number, it makes it easier to identify the right account for your money transfer.
Furthermore, routing numbers are used by banks in directing the exchange of funds among themselves. When you check the bottom left of most personal checks, you will find the routing numbers. Besides, larger banks can have multiple routing numbers.
To that end, the number you need will be determined by the state where the account was opened. Similarly, smaller banks will typically have just one bank routing number.
Since a bank can have several of these numbers, you should confirm that your routing number tallies with the exact bank where you opened your account.
Where can You find a Routing Number?
Finding one is one of the easiest things you can do. So, if you check the bottom left of your checks, you will find the number. That is if you have an American bank account.
Also, when you locate your routing number, next to it is your account number. For the payee to find their routing number, they should log into their online banking.
More interestingly, these numbers are not private or confidential, therefore, if you have difficulties finding your routing number on your check, the bank’s website will be another place to go. Usually, banks publish their routing numbers on their website.
A bank statement is another place you can look up your number if you do not have any checks. The routing number is the nine-digit number printed close to your account number.
However, if all options fail, you can contact your bank or visit a branch nearby and ask for your routing number.
Routing Number versus Account Number
Every financial transaction taking place in the bank needs two basic numbers to help in identifying customers. These are the routing number or account numbers. Besides, both of them are assigned to you when you open your account.
If you set up a direct deposit (a paycheck, for instance) or you order checks online, you will need both your routing number and account number for that.
Your account number is just like your ID or fingerprint specific to you alone as an account holder. At the same time, a routing number helps you to identify each financial institution with an exclusive numerical ID.
Each time you make an electronic money transfer, you will need to provide both routing numbers and account numbers to help in locating the specific financial institution and the right person for the fund transfer.
How to Find a Bank with a Routing Number
If you want to search for a bank using its routing number, ABA’s website will be a helpful place to do so. Also, when you look through the bank’s website, you can input the bank’s name and address to enable you to find the number. At the same time, it is possible to receive your check without a bank name.
To be precise, the Federal Reserve system can process transactions if they receive the bank routing number and account number. As the case may be, you need to protect your account number just the same way you do your social security number.
Why do You need to know Your Bank’s Routing Number?
It is important to know your bank’s routing number or how to find it. The following reasons are enough for you to know it:
It helps you to set up direct deposit: some employers choose to pay salaries using checks. At the same time, others offer direct deposits. With direct deposit, you can easily access your cash.
It does not cost anything to set up a direct deposit and that is aside from the fact that it can save you the stress of going to the bank.
Technically speaking, for you to receive a direct deposit, you will need to fill out a form, stating where you want your money to go. without a doubt, your account number is not enough to give your employer when you are setting up your deposit.
The reason is that account numbers are not bank-specific. In addition, you will need to provide your routing number to your employer to enable them to identify your bank when depositing your paycheck.
It helps you to easily transfer money between banks: when you are transferring money from one bank to another, you will need to provide your bank’s routing number. With your bank’s routing number, it will enable the bank to get easily identified.
Also, one of the requirements to open a checking or savings account online, you will have to provide your routing number, together with your account number to enable you to successfully move funds between the accounts.
You can receive a tax refund deposit: getting a tax refund by check can take weeks. As a result, many people would prefer to have their tax refund automatically be deposited into a bank account. thus, you will need to provide your routing number and account number to make certain that the government deposits your money into the right account.
It enables you to pay your bills online: since many lenders and creditors offer online payment, you can pay your bill online or set up an automatic payment to make your finance management easier. Some creditors allow account holders to set up automatic payments using a credit card or a bank debit card.
On the other hand, you may set up an ACH payment, and have funds automatically drafted from your bank account. Hence, you will need to provide your bank routing number and account number.
It helps you to make a wire transfer: if you need to send money as quickly as possible, you may make use of a wire transfer from one bank to another. This takes less time than the ACH transfer. In addition, you must provide your routing number and account number as well as those of the recipient.
Is there a Possibility for Bank Routing Numbers to Change?
Although every bank has at least one routing number, some of them usually have multiple routing numbers. Also, each bank’s routing numbers vary within banks, just the same way they can vary by state. For instance, the routing number of a bank in California may not be the same for the bank’s branch in Ohio.
In addition, different types of transactions within a bank can have different routing numbers. Therefore, when you are in doubt, you may have to contact your bank to confirm if you are using the right number for direct deposits, ACH payments, wire transfers, and others.
It is also very necessary to know that bank and credit union routing numbers can also change from time to time. This mostly takes place when a financial institution gets merged with another, changes the reason of the routing number, or has a need to create new routing numbers regarding diverse kinds of transactions.
As a result, it is good to regularly confirm that your routing number has not changed. If it changes and you are not aware, you may find yourself using the wrong routing number when depositing money and the end could be doing so into the wrong bank account.
Do You need a Routing Number to Transfer Money to the United States?
Whether it is a payment within the United States or a money transfer from a different country, you must use a routing number to be able to make the transfer. The reason is that the routing number helps you to locate the particular bank in the US that will receive the payment.
The type of money transfer you are making may influence the routing number you will use. There are diverse routing numbers for wire transfer and ACH. Also, banks mostly prefer wire transfers, however, some banks (usually First Century Banks) or smaller credit unions would only accept the ACH.
In addition, a wire transfer made through online banking or an FX platform could need a separate routing number from the routing number on a check. That is why you must try to double-check the payee’s routing number before making any money transfer.
What You may not know about Bank Routing Numbers
The bank routing number was first developed in 1910 by the American Bankers Association (ABA).
Each bank is likely to have as many as four routing numbers, other than the major number.
The ABA’s Routing Number Administrative Board is in charge of assigning routing numbers to individual banks.
Each nine-digit number is made up of three components. They are:
1. Federal Reserve routing symbol: This contains the first four digits of the routing number. If the first two digits of that routing number are 00, that is an indication that the routing number is for a check or draft from the US Government.
In addition, banks use routing numbers that begin with the first digits of 01-12, while the outing numbers of traveler’s checks begin with 80. In other cases, the remaining first two digits are reserved for ‘future use’ and which the ABA’s Routing Number Administrative board influences.
2. ABA institution identifier: This comprises the next four digits and they are exclusive to identifying the exact bank or financial institution.
3. Check digit: This comprises the last set of numbers and they help the bank to avoid any form of error during the transactions.
Frequently Asked Questions
#1 What does a routing number tell you?
Your routing number helps you to identify the location where your account was opened. A routing number can also be called an ABA number or an RTN.
#2 Is it safe to give out your routing number and account number to someone?
The answer is yes. But it may not be secure to do so, even though your bank routing number is fairly public information. Therefore, it is very easy for anyone to get it.
#3 What happens if you make use of the wrong routing number?
Using the wrong routing number may lead to your designated financial institution rejecting or returning the deposit to the IRS. The IRS will issue a paper check for the amount of money once it receives it.
A bank routing number is not part of people’s ‘thought list’ when carrying out a bank transfer. However, they are very important in the success of that transfer. With the nine-digit numbers, banks can easily identify one another and avoid errors and delays.
To a certain degree, it helps them to build trust in the banking system. Moreover, your deposits and payments can easily get to the destination swiftly. Do not forget, banks’ routing numbers are usually located at the bottom left of your check. You can also get them on the bank’s website and others.