banking

How does a check's routing number work?

Check closeup © Waxen/Shutterstock.com

A routing number, also known as an ABA (American Bankers Association) number or routing transit number, is a unique nine-digit number assigned to a bank or credit union so it can send to and receive money from other financial institutions.

Rather than reading a check to find out your bank's name and potentially confusing it with a bank of a similar name, routing numbers help bank staff and the machines that now process checks to know exactly where money is supposed to go. That way, checks intended for Bank of America and American Bank never go to the wrong place by mistake.

One bank may have many routing numbers, depending on things like the location of the account or the task it's being used for, but no two banks will ever have the same routing number.

Routing numbers are used for lots of everyday tasks:

  • Direct deposit.
  • Automatic bill payments.
  • Check processing.
  • Wire transfers.

Where to find a routing number

The routing number is part of the magnetic ink character recognition, or MICR, line at the bottom of your check, which also includes your account number. If you're trying to find out your bank's routing number, that's a good place to start.

Sample of a personal check

Alternatively, your bank's website may post its routing numbers online. That's because, unlike your checking account or savings account number, it's not something you really need to keep secret, says C. Diane Poole, senior vice president of data management and policy development at the American Bankers Association.

"Most banks will post their routing numbers on their websites, because when people want to wire them money, they need that information," Poole says. "It becomes more sensitive when you have a routing number and an account number, because then you can actually have access to someone's individual account."

You'll also want to make sure you have the right routing number for what you're trying to do. For example, the routing number on your checks may differ from the number you would use for doing a wire transfer.

Where did routing numbers come from?

Routing numbers were originally created by the American Bankers Association in 1910 as a way to make check processing easier and more secure, Poole says.

"They needed a way to uniquely identify the paying bank -- in other words, the bank that was going to be responsible for actually honoring the check -- so this was kind of the first time that an identification number was used," Poole says. "This was back when there weren't any computers."

The routing number helped a person taking a check be sure they would actually get the money the check promised from the payer's bank.

After the Federal Reserve was founded and took on a large role in the processing of payments, a Federal Reserve number was added to each bank's routing number. That "Federal Reserve routing symbol," as it's officially known now, specifies the type of institution and the Federal Reserve district in which the account was opened.

Check processing becomes near instantaneous

The numbers would go on to be used in electronic check-cashing networks starting in the 1960s, which greatly sped up check processing. The passage of the Check 21 Act, and the ability of banks to make electronic copies of checks for transportation, rather than sending paper copies, has made processing almost instantaneous.

In fact, routing numbers are part of the reason that the "check float" -- writing a check you don't have the money to cover in hopes that a deposit will come through to cover it before it is processed -- doesn't really work anymore, Poole says.

"When you write a check, there's a chance the money's already been debited before the ink dries on the check if it's been remotely captured," Poole says. "People just need to understand that payments move at lightning speed."

In other words, don't write checks that your bank can't cash instantaneously.

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