routing number
A nine-digit bank identification number used to identify the financial institution in electronic transfers, direct deposits, and check processing.
Example
“To set up direct deposit, she provided her employer with her bank's routing number and her account number.”
Memory Tip
ROUTING number = the bank's address code. ROUTES money to the right institution.
Why It Matters
Understanding routing numbers is essential for setting up direct deposits, making electronic transfers, and ensuring your payments reach the correct financial institution. Without the correct routing number, your money could be delayed or sent to the wrong bank, causing significant inconvenience and potential financial problems.
Common Misconception
Many people believe that routing numbers are unique to their individual account, but they are actually assigned to the entire bank or credit union branch. Your account number is what identifies your specific account, while the routing number identifies only the financial institution itself.
In Practice
When you set up direct deposit for your paycheck at a new job, you need to provide both your bank's routing number (for example, 021000021 for Chase Bank) and your personal account number. Your employer uses the routing number to direct your paycheck to Chase, and then the account number ensures it goes into your specific checking account rather than someone else at the same bank.
Etymology
ROUTING (directing, channeling) NUMBER. The number that ROUTES transactions to the correct bank.
Common Misspellings
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See Also
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