When you need to send funds to another person’s bank or credit union account fast, you have three options for bank-to-bank transfers: Wire transfers, Automated Clearing House (ACH) transfers, and third-party money transfer services offered by your bank.
There are, of course, other way to ways to send funds electronically, such as wiring cash via Western Union or transmitting money from one PayPal account to another, but none of those services can help you when you want to send funds from bank to bank.
We’ll look at all the bank-to-bank transfer options your bank or credit union may offer you and provide tips on how to keep your money safe when making transfers.
Transfer Money from Bank to Bank: 3 Main Options
There are three ways to send funds from one bank account to another. Keep in mind that not all financial institutions offer all three of these options:
- Wire transfer – This is a direct transaction between two financial institutions, and it’s generally not an automated process. Since executing a wire transfer involves manual processing and can require phone calls between the banks, the fees can be very high compared to other options. But it’s also the fastest method and may be your only choice if you need to transfer a large sum of money or send funds overseas.
- ACH transfer – Compared to wire transfers, ACH transfer fees are lower – even free at some banks and credit unions – but transactions will take a day or two to complete.
- Third-party money transfer – Financial institutions are increasingly turning to third-party money transfer services that offer high levels of convenience and low fees. The two most common are Popmoney and clearXchange, and they’re usually offered as features within the online bill pay system at your bank or credit union.
Here’s how the three options compare:
| Info | Wire Transfer | ACH Transfer | Third-Party Money Transfer
(Popmoney or clearXchange) |
|---|---|---|---|
| Speed | Same day | 1-2 business days | 1-3 business days |
| Fees | About $25 | Up to $5 | Up to $5 |
| Daily Limit | As high as $100,000 | Usually $10,000-20,000 | Up to $2,000 |
| Monthly Limit | Usually none | Usually $50,000-100,000 | Up to $10,000 |
| Availability | Most banks and credit unions, but sometimes only for business accounts | Most banks and credit unions | Over 1,400 banks and credit unions |
| International transfers | Yes | Only to 40 countries | No |
How Transfers Work
Wire Transfers
To send funds via wire transfer, you will need to provide your bank with information about the recipient’s account. Ask the recipient to provide the information listed below and ask if there are any special routing or notification instructions requested by the bank receiving the funds (especially for international transfers).
| Information Needed for Wire Transfers | |
|---|---|
| Sending Funds to a U.S. Account | Sending Funds to an International Account |
| Name and address of accountholder Name and address of bank or credit union Routing number Account number |
Name and address of accountholder Name and address of bank SWIFT Code or BIC of bank IBAN number (for certain countries) or account number |
In some cases, your bank or credit union will want to first send a test transfer of a small amount to confirm that you have provided the correct account information. If there’s a problem, it’s best to find out when transferring $1.00 rather than thousands of dollars.
ACH Transfers
To send an ACH transfer, you will only need the routing number and account number of the recipient’s account, but your bank may also request the name of the account holder and financial institution for confirmation purposes.
Some banks and credit unions will require that you use a third party money transfer service to initiate an ACH transfer.
Third Party Money Transfer
Most banks and credit unions now offer money transfers through the Popmoney or clearXchange third-party services. These services have very low rates, which are waived by the bank or credit union in some cases, and are generally integrated into the financial institution’s online banking system. Popmoney, offered by financial services company Fiserv, is the more common of the two, and it is available at more than 1,400 banks and credit unions including six of the 10 largest banks. ClearXchange is a collaboration among Bank of America, Capital One, Chase and Wells Fargo, and is currently only available to their customers and the customers of Colorado-based FirstBank.
In both cases, the funds transfer is generally sent via ACH transfer, but both Popmoney and clearXchange provide simple methods to set up the transfer even if you don’t have the recipient’s account information. Under these systems you can provide the email address or phone number of the recipient, who will receive an email or SMS message with instructions for accessing the funds. If the recipient’s bank or credit union participates in the same system, fund can be retrieved through that institution’s online banking system. Otherwise, the recipient will need to provide a routing number and account number to receive the funds.
This added convenience also provides a layer of security, since the person receiving the funds does not need to give out his or her account number to the person sending the funds. Money can be transferred even if the sender only knows the recipient’s email address or phone number.
Tips for Sending Money Safely
Financial institutions take safety seriously, and in general wire transfers and ACH transfers are very safe. But there are some precautions you should take to safeguard your account information and to make sure your money gets to its intended recipient.
- The same thing that makes wire transfers and ACH transfers attractive to consumers -- that they’re quick and convenient -- also makes them very popular among scammers seeking to cheat you of your money.
For example, “phishing” scams, in which fraudsters seek to convince you you’re dealing with a legitimate business, often will demand immediate payment by wire transfer so that they can secure their ill-gotten gains before you have second thoughts. So before sending funds electronically, it’s important to make sure you really know who you’re sending money to.
- Is someone seeking to wire funds to you? To receive a wire or ACH transfer, you’ll need to give the sender your account’s routing number and account number, which opens you up to unauthorized transactions if these numbers fall in the wrong hands. If it’s not someone you absolutely trust, it’s a better choice to ask the sender to use a service like Popmoney or PayPal, in which you only provide your email address. You then will set up the incoming transfer of funds yourself without giving sensitive information to the sender.
When you’re the one sending funds, you don’t need to have concerns about the privacy of your account information. Since the transfer is initiated by your own bank or credit union, you do not need to give your account information to anyone.
Image: YAKOBCHUK VASYL/Shutterstock
