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Using Wire Transfers

Last week, we examined the differences between a wire transfer and an ACH transaction. Wire transfers can be very convenient for a number of purposes, and they are used to save time, and to increase the security of transactions. You can use wire transfers for more than just sending money; wire transfers can be useful in other ways as well.

Because wire transfers are secure, they can provide peace of mind. When a CD matures, many banks and credit unions mail a check. You have to worry about the check being lost in the mail, as well as lose out on interest on the money for several days while you wait for the check to arrive and the funds to clear. A wire transfer ensures that the check does not get lost in the mail, and allows you to put your money to work that much faster.

Another way you can make use of wire transfers is to use one to open an account. Instead of mailing a check to the institution (and being concerned about security), you can arrange a wire transfer. This allows you to open and fund a new account quickly, and bypass the uncertainty and time associated with mailing a check.

It is also worth noting that some Internet banks allow you to make wire transfer deposits free of charge. This means that you can add money to a CD account, or open a new account, without paying wire transfer charges. (Be careful, though: You may have to pay when you withdraw from accounts using a wire transfer.) Even though wire transfers can be expensive in some cases, there are banks that are trying to be competitive by offering improved services. This includes providing wire transfers with no fees. If you anticipate that you will be using wire transfers a great deal, it might be


One of the most secure ways to send a wire transfer – and possibly even save on fees – is to use Fedwire to transfer funds. As you might guess from the name, Fedwire is the system operated by the Federal Reserve. You might hear it referred to, formally, as the Federal Reserve Wire Network. In some form or another, Fedwire has been in operation for close to 100 years. As a result, it is considered one of the most reliable wire transfer systems in the world. Better technology has only made Fedwire more reliable and secure.

Fedwire is owned and operated by the 12 Federal Reserve Banks. It is networked so that those banks can send wire transfers in real time. In addition to serving the 12 Fed banks, member banks can also access the Fedwire system. Fedwire members can include American banks and credit unions, as well as foreign financial institutions with branches located in the U.S. In order for any financial institution (or even some government groups) to have access to Fedwire, though, it needs to have an account with one of the 12 Federal Reserve Banks.

It is possible to use Fedwire at your institution, assuming that your bank or credit union is a member of the system. In some cases, you can find financial institutions that are willing to perform your Fedwire transaction for a reduced price. This is because the Fed is a non-profit, so its fees (it has to charge for the service) are low. Some banks and credit unions won’t even charge you for making a Fewire transaction. You will need a Fed tracking number to verify your transaction, and not a bank tracking number.

Fedwire takes place almost in real time, and also acts as a settlement system. This makes it extremely easy to send and receive money almost instantaneously. However, it is important to note that Fedwire transactions are limited to specific operating times. Interestingly, the Fedwire operating hours take place from 9:00 p.m. Eastern on the preceding day to 6:30 p.m. the day of. So, Monday operating hours are actually from 9:00 p.m. Sunday night until 6:30 p.m. Monday night. There are different cutoff times for foreign payment orders (5:00 p.m.), and non-settlement orders (6:00 p.m.).


Another way to send financial information securely is to use SWIFT. The Society for Worldwide Interbank Financial Telecommunication operates the SWIFT network, which provides a method of sending and receiving global payment orders. This is a wire service that sends messages with financial information (including bank account numbers and money amounts), but that doesn’t actually involve itself in making transfers.

SWIFT does not perform clearing or settlement of money transactions. The organization does not hold accounts, either. Instead, member banks join up as part of the system, and then an account holder at one of the banks can create a payment order for another account in another country, as long as the receiving bank is also a SWIFT member. This makes it easy to communicate payment messages, and to verify foreign payments. Involved banks receive the information securely via SWIFT, and then clear and settle the payment themselves.

Third Party Payment

Third party payment services aren’t exactly wire transfers, but they do provide you with an electronic way to send money around the world. You can use PayPal, Google Checkout and other third party payment methods to pay for items online, transferring money without revealing credit card numbers or other financial information. These accounts can be used to receive money, and then transfer it to your bank account. However, unlike a wire transfer which occurs almost in real time, it can take anywhere from two to seven days (depending on whether business days are involve, or foreign funds are used) to complete a transaction using third party payment. However, depending on the type of wire transfer you use, it might be that third party payment is much less expensive.

Technology has made it possible to send and receive money electronically fairly easily. You can send money fairly quickly and securely, making it possible to enjoy peace of mind, without the worry of having a check intercepted.

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  |     |   Comment #1
A wire transfer can be cheaper through a credit union. Whereas a local bank charges $20, my credit union charges $8, which they tell me is their cost.
  |     |   Comment #2
Which Internet bank offers free outgoing Wire transfers? Wamu was the only one IMO
  |     |   Comment #3
I find it easier to open a free checking account where you have a CD. You can request to deposit maturing CD into the checking account and withdraw fund by writing a check or using ACH.

I have never had a need to wire transfer enough funds to justify additional costs involved.
  |     |   Comment #5
A poorly-written and vague article.  I also have not found any information that suggests an individual can make a Fedwire wire transfer (i.e., it appears to be for institutions).  So of what use is information about Fedwire transfers to readers of DepositAccounts.com?  None apparently.
John Mullen
  |     |   Comment #6
Individuals can and do send payments via Fedwire. You just don't see it.  Everytime somone "deposits" a check you write your bank receives and advice that they are to initiate a "Fedwire" payment, i.e. "Wire Transfer" to the recipent's bank for further credit to hte beneficiary. You could have just as easily initated the wire transfer yourself and accomplished the same thing, the only difference it your bank cannot pretend that that computers don't exist and take 3 days  to sit on the float.

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