As we become more technologically advanced, we need to learn new things in order to keep the pace. This is true when it comes to banking. Today, we set up automatic payments, bill pay, and handle all sorts of financial transactions through our banking systems. Online banking has already become so advanced that it is to the point that the majority of us rarely see the need to step inside a brick and mortar facility anymore. All of this, however, is made possible by what is called the ABA routing number. You've probably already had your employer ask you for it as well as some other places you do business and you've wondered why are banks routing numbers important, and why so many people need to know it.
Direct Deposit:
There are several times when it's important to know your bank routing number. If you have a job where you want to arrange for your paycheck to be deposited directly into your bank account, your routing number is the tool they'll use to do it. It can also be used to make a direct deposit of your tax refund or when you set up transfers between bank accounts, investment accounts, or peer-to-peer accounts as well. This is one reason why are banks routing numbers important.
Where To Find The ABA Routing Number:
When you need the routing number you can easily find it on your printed checks. Look at the bottom of your check and you'll see a line of digits; the first nine digits are the ABA Bank Routing Number. They are specific to your account and your bank.
If you don't have a physical check, you can easily find the number online at either your bank's website or on the national registrar. Since these numbers are open to the public there is no need to keep them secret like you would your social security number or your account number. Anyone who knows your bank's name and location can look it up.
The Purpose:
For those who still wonder why are banks routing numbers important it may help to understand their main purpose. They were developed so that it would be easier for banks to perform automated processing of large numbers of checks and other negotiable instruments. This is why when you see the number at the bottom of the check they are printed so that they can be read by machines. While they may appear to be just random numbers each digit has its own meaning. The first four digits are Federal Reserve Identifiers, the first two tell us the Federal Reserve district your bank is in, the second two identify the specific Federal Reserve branch where the check processing is done.
The next four digits identify the number assigned to your specific bank and the final digit is a classifier, which indicates what type of negotiable instrument you're using. In most cases, this could be a checking account but others could be other forms of investment accounts as well. With these nine digits, the system has eliminated the need for humans to be involved in the processing of checks and everything can be done automatically. So if you're still wondering why are banks routing number important consider just how much time you would need to get your checks cashed, money sent, or bills paid without them.