When a person withdraws money from an account, he must provide the retailer with a means of identifying where to draw the money from. This necessitates offering the retailer several pieces of information. While a bank account number is critical, the person will also have to provide the location in which the account is kept. This is done by providing a routing number linked to the account.
Routing Number
A routing number is a nine-digit number issued by the American Bankers Association. This number corresponds to a particular physical location where the money is in the account, where the account will be processed, or where the account is open. A routing number is printed on the bottom of checks associated with a checking account. However, savings accounts also have routing numbers to use when processing transactions.
Function
The purpose of a routing number is to allow banks and other financial institutions to identify the precise location where an account is kept. While sometimes providing the name of the bank and the account number may be enough to process a transaction, in other cases, the bank will need to know where the account is located. In this cases, the account holder will need to provide the bank the routing number assigned to the account.
Savings Account
Although routing numbers are most commonly associated with checking accounts, they are also attached to savings accounts. For example, according to Bank of America, all accounts, including savings accounts, are assigned a number. Each account, however, will not have a unique routing number. Rather, the routing number will correspond to a location, not an account. This means many different accounts will share the same routing number.
Considerations
Locations typically have several types of routing numbers. This is because a location will be assigned a different routing number for each type of transaction that it wishes to process. So, for example, all accounts held with Bank of American in northern California will be assigned three routing numbers. One of the routing numbers will correspond to paper checks, another will correspond to electronic transactions, and another will correspond to wire transfers.
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