Personal Finance

Can the bank move money from one account to another without permission?

  • Last Updated:
  • Jul 17th, 2017 10:40 pm
[OP]
Newbie
Mar 7, 2016
3 posts

Can the bank move money from one account to another without permission?

Sorry for this ignorant question but I woke up this morning to see that money had moved from my savings account to my chequing account. The transfer is described as a "pre-authorized transfer from xxxxx"
I did not make this transfer and the only logical explanation that I can come up with is that the bank did it on their own initiative. Here's the background:

Sunday night I made a transfer of a rather large sum of money from chequing account in Bank A to Bank B using Bank B's website.
There wasn't enough money in Bank A's chequing account for the transfer because it was in the savings account.
I didn't transfer the money from the savings account to the chequing on Sunday for the aforementioned transfer because I planned to do it Monday morning.

Woke up Monday morning to see that a transfer was already made. Am I going crazy? Or can the bank really do this?
8 replies
Deal Fanatic
Dec 27, 2013
5910 posts
2021 upvotes
Toronto
If they need to offset a pending withdrawal yes.

But for fun? No.
Jr. Member
Mar 16, 2011
163 posts
52 upvotes
I thought there was a provision in the account agreements that they can use your other accounts to cover shortfalls (which reduces risks for the banks). Check your terms?
Deal Addict
Feb 4, 2015
2396 posts
393 upvotes
Ask them... that way sure of who did it.
Deal Guru
User avatar
Aug 8, 2012
10198 posts
3789 upvotes
BC
Maybe you scheduled it and forgot :)

Which bank is bank A and B?

Tangerine also can be confusing because if you do an external transfer "now" it actually schedules it for the next day.

Some banks also have overdraft from savings. I think BMO has this.
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Deal Addict
Feb 29, 2012
2086 posts
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Richmond
Typically these days you are required to have an authorized overdraft agreement in place before your bank would do that transfer for you. Otherwise they will reject the transfer and report "insufficient funds", and there might be a penalty from Bank B. But I have had banks do that sort of courtesy savings-to-chequing transfer for me in the past. I think it's something that is allowed, and can be done at their discretion as a courtesy to the customer.

In this case it was to your benefit, but it might not always be. Suppose somebody fraudulently attempts to make a large withdrawal from your chequing account, way more than the small prudent amount you normally keep there. Is the bank going to automatically cover it with funds from your savings account? I'd rather they didn't.

Obviously if the banks could manage to advance from the stone age they operate in, the modern thing would be to message you for an authorization to transfer in the case of overdraft.
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Aug 8, 2012
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Faith24 wrote:
Jul 17th, 2017 7:44 pm
Typically these days you are required to have an authorized overdraft agreement in place before your bank would do that transfer for you. Otherwise they will reject the transfer and report "insufficient funds", and there might be a penalty from Bank B. But I have had banks do that sort of courtesy savings-to-chequing transfer for me in the past. I think it's something that is allowed, and can be done at their discretion as a courtesy to the customer.

In this case it was to your benefit, but it might not always be. Suppose somebody fraudulently attempts to make a large withdrawal from your chequing account, way more than the small prudent amount you normally keep there. Is the bank going to automatically cover it with funds from your savings account? I'd rather they didn't.

Obviously if the banks could manage to advance from the stone age they operate in, the modern thing would be to message you for an authorization to transfer in the case of overdraft.
While we are spitballing ideas ... they can match names on the PAD so they could decide to extend common courtesy only if the source/destination names match (personal inter-FI transfer) ... of course that doesn't prevent fraud if someone's hacked your other bank account ... but it's better than siphoning off money from savings for some other fraudulent type of activity :)
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Deal Guru
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Aug 8, 2012
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ace604 wrote:
Jul 17th, 2017 2:27 pm
Some banks also have overdraft from savings. I think BMO has this.
This is what I was remembering reading:

"With Overdraft Transfer Service you can pre-arrange to have available funds transferred to your BMO account from one of your other BMO accounts, your BMO credit card or your BMO line of credit to cover any accidental overdraft13. A fee of $5 per transfer applies.14"
https://www.bmo.com/main/personal/bank- ... g-services

Includes not only savings, but also credit card or line of credit. Seems handy on the surface ... until you realize you could just use the LOC as a chequing account in the first place and avoid ever paying $5 fees :D
(not sure if BMO lets you do this but PCF, CIBC, TD let you do it ... well, you CAN do it ... I don't know if they like to "let" you or not :D)
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Plastiq: Pay any bill with credit card for 0-2.5% fee (help meet min spending and keep old cards active!)
Rewards program transfer times (e.g. SPG->Aeroplan, Marriott->SPG, Amex MR->SPG...)

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