What Is the Bank Routing Number?
by Bank Routing
Each person has a credit card and is used to using it every day. Bank payments, online transactions, and other financial procedures become a habit for us. However, do you know what is the routing transit number? Why is it necessary to know it? How to find this number on a check? If not, this article will be very helpful for you to read.
What Is the Routing Transit Number and How Was It Created?
The routing transit number is a nine-character code on your check near your account and check numbers. This code is used within the United States of America to simplify the identification of the location where your bank account was opened.
The very system of routing transit numbers was created in 1910 by the American Bankers Association. The main aim of this invention was the opportunity to make all kinds of bank-to-bank transactions within the country a little bit faster. This measure was very helpful; therefore, this system is still used for such new technologies as Wire transfers and Automated Clearing House that are popular nowadays.
Today 26,895 active routing transit numbers are used by different financial institutions in America. According to Federal laws, each financial institution must have at least one active bank routing number to make different transactions. The actual Routing Number Policy allows banks to have up to five routing transit numbers, although some banks may have even more numbers due to their size.
The bank routing number is considered the simplest way to identify the exact location of a particular financial institution in the system. Each bank routing number consists of nine figures. The prefix of this number means its location and the suffix signifies a banking firm within this location. Some prefixes are used to denote major cities, while others represent states of America. Therefore, the bank routing number is a nice way to define where a certain bank is located.
How Can You See the Bank Routing Number?
From the very beginning of its use, the bank routing number was utilized in the fraction form. However, today the MICR (magnetic ink character recognition) form is more widespread. Although today both forms are used for different bank transactions, the MICR is more popular, and you can see a bank routing number on each check. At the same time, the fraction form of the routing transit number is used in banks as a kind of back-up.
One may ask how to define what the bank routing number means. It is quite simple to read the bank routing number on a check. All you should do is just see the figures. Each routing transit number can be determined as follows: the first 4 figures (XXXX) mean the Federal Reserve Routing Symbol, the next 4 figures mean the Institution Identifier in ABA, and the last one is the check digit. Hence, by using this simple information, you can define where a particular bank is located.