ABA Routing Number
An ABA routing number is a nine-digit code that identifies a specific financial institution in the United States. Assigned by the American Bankers Association, it ensures money moves to the right bank during electronic transfers, direct deposits, and check processing.
ABA Routing Number Definition
An ABA routing number is a nine-digit code that identifies a specific financial institution in the United States. Assigned by the American Bankers Association, it ensures money moves to the right bank during electronic transfers, direct deposits, and check processing.
ABA Routing Number in Practice
When you set up direct deposit with your employer, they ask for your routing number and account number. The routing number tells the payroll system which bank to send your paycheck to. You can usually find it on the bottom-left corner of a check or in your bank's online portal.
Why It Matters
Every ACH transfer, wire transfer, and bill payment relies on routing numbers to function. Without them, there would be no standardized way to identify banks across the U.S. financial system.
If you're setting up a new business bank account, you'll need your routing number handy for payroll, vendor payments, and receiving customer payments. Getting it wrong means delayed or failed transfers — which can hurt cash flow.
FAQ
Q: Is a routing number the same as an account number?
A: No. The routing number identifies your bank, while the account number identifies your specific account at that bank. You need both for most transactions.
Q: Can a bank have more than one routing number?
A: Yes. Large banks often have different routing numbers for different states or transaction types (ACH vs. wire).
Related Terms
> Holdings offers free business checking with 1.75% APY. Open a free account →
Related Terms
An overdraft occurs when you spend or withdraw more money than what's available in your bank account, causing your balance to go negative. When a bank allows the transaction to go through despite insufficient funds, it's called an overdraft. Banks typically charge a fee — often $25 to $35 — each tim
Depreciation is the accounting process of spreading the cost of a tangible asset over its useful life. Instead of recording the entire cost of equipment, vehicles, or buildings as an expense in the year you buy them, depreciation allocates that cost gradually — matching the expense to the revenue th
Non-sufficient funds (NSF) occurs when a bank account doesn't have enough money to cover a transaction — like a check, ACH payment, or automatic withdrawal. The bank declines the transaction and typically charges the account holder an NSF fee, which usually ranges from $25 to $35.
An EIN, or Employer Identification Number, is a unique nine-digit number assigned by the IRS to identify a business entity for tax purposes. Also called a Federal Tax ID Number or FEIN.