To the category of things I can imagine but not do, add this: A bank account that does not exist, but merely points to one that does. Analogous to forwarding email addresses that do nothing other than forward to real email addresses, the forwarding bank account would solve the conundrum of what you do when you have all your bills auto-debited from a checking account, and then you decide to switch checking accounts.
The only way that I know to solve this currently involves allocating money in both your legacy and your new bill-paying checking account, and keeping the legacy account open until the last auto-debit is taken out of it. It’s doable, but it’s tedious, and most companies generate at least one bill that you need to manually pay when you switch accounts on them. With a forwarding account, you would not switch accounts, as far as your creditors were concerned, so auto-debit would be smooth even when switching your underlying real checking account to another bank.
Can anyone with inside knowledge of how routing numbers and account numbers are actually used in the auto-debit process comment? Is this feasible, as the system currently works, or would the notion of a forwarding account need to be built in from the ground up?
I have no idea if it’s possible, but it’s sure as hell a brilliant idea! I’ll admit that not wanting to deal with changing all of our auto-debits has made me hesitant to change banks, even with dissatisfied with service. And realistically, I’m sure banks count on that.
Actually, I wonder if you could use PayPal similarly, at least for any payment that allows using PP or a credit card number rather than a checking account number – all you’d have to do is change the account that PP points to, and you’re good to go.
The PayPal angle is interesting. I avoid PayPal whenever possible (and these days, it’s possible most of the time) but at one time, they did offer a PayPal debit card that would draw on your PayPal account balances. Any auto-debit setup that would accept a debit card would work, and as you suggest, you could change the accounts out from under the PayPal account and not affect the auto-debits. However, my experience with PayPal suggests that it might actually be more hassle to do this than to switch banks 🙂
I know nothing about this, but if it was possible, I’d bet USAA or ING would have offered such a service, because they seem to be the most forward thinking banks around.
I bet it’s not possible because of anti-money laundering laws, not because of some technical reason.
I’m trying to think of how money laundering would be unavoidable with such a service. I don’t know much about money laundering, so it’s possible that I’m overlooking something. As long as some process (obviously, I’m hand waving here) validated that the target accounts were under your control, it shouldn’t matter which one you point to via the forwarding account. If there were any laundering involved, I’m not sure how the forwarding account would facilitate that.