Banking 101: What You Need to Know About Wire Transfers

A wire transfer can be a great solution when you need to send money quickly. Also known as a bank transfer or credit transfer, this is a speedy way to electronically send funds through a bank, credit union or nonbank cash office.

Wire transfers can be used to send money to another person, make regular payments — such as scheduled loan payments — or execute a large single transaction, such as closing on a house. Originally called “wire” transfers because they were executed over Western Union’s telegraph wires, these payments have evolved into a fast electronic method to quickly transmit funds.

Types of wire transfers

Bank transfer: Uses a bank to electronically send money to the recipient’s bank. This can be a domestic or international transfer.

Nonbank transaction: Uses a cash center, such as Western Union or MoneyGram, to send money to a recipient. Can be made in person, by phone or online, and sent to a cash office, bank account or some mobile wallets. Nonbanks offer both domestic and international wires, although delivery varies by location and country.

Domestic transfer: A rapid, secure option for sending funds within the U.S. Costs vary by bank or nonbank, and also by amount. Funds may be available immediately or up to two days later. Domestic wires can be scheduled regularly.

International transfer: An efficient, reliable way to send money to someone in another country. International wires require more information, such as a SWIFT (Society for Worldwide Interbank Financial Telecommunication) code, a unique identification code, and/or an International Bank Account Number (IBAN) number to identify international bank accounts. Funds may be available in one to two days but could be delayed by local bank holidays, an intermediary bank or other local conditions. Foreign wires are one-time transactions.

With both domestic and foreign wires, funds are processed through a clearinghouse. Domestic wires between banks that are a part of the Federal Reserve System go through the Federal Reserve Wire Network, or Fedwire. With an international wire, foreign banks communicate through SWIFT and funds may pass through CHIPS (Clearing House Interbank Payments System), which settles payments between international institutions.

How much does it cost to send a wire transfer?

Wire transfers often come with higher charges than other electronic payments like an ACH or transfers between linked accounts. Banking fees for a wire transfer may depend on the type of account you have, domestic or international wires and the amount of money being sent. At Citibank, for instance, domestic wire fees range from no charge for premium accounts to $25 per transfer, while foreign wires can cost up to $35 per wire. Some Citi accounts incur a $15 fee for incoming wires and there’s a daily limit on some wire amounts (as do other banks).

At nonbanks, fees are dependent on the amount, destination and if the transaction is made in person or online. Fees with Western Union, for example, will vary by payment method, loyalty program and device. Current rates for a wire transfer of $1,000 will cost between $5 and $100, depending on the above variables.

How to send a wire transfer

Wires can be arranged in person at a bank or nonbank, online or through a mobile app. Here’s what you will need for each transfer:

Are wire transfers safe?

Wire transfers are generally considered safe and secure, and most institutions supply tracking numbers and customer support. Even with those safety nets in place, you should still be cautious because once money is wired, it is difficult to get it back.

The best protection is to only send money to people you know and confirm all details, including location and amount. Both bank and nonbank wires will supply confirmation and tracking information, which you can monitor and share with the recipient.

Federal rules are in place to help protect consumers on foreign transfers. Consumer Financial Protection Bureau (CFPB) regulations require companies to provide information on exchange rates, all associated fees and when money will be available. In addition, senders have 30 minutes to cancel transfers and get their money back, and companies are required to investigate problems.

Some banks take additional steps to safeguard their clients. Bank of America, for example, offers its SafePass feature to guard against fraud and identity theft. When customers make an online transaction, including a wire transfer, they receive a one-time, six-digit code on their mobile device or a paper card from the bank. To execute a wire, customers must input that six-digit code.

What’s safe:

• Wire transfers to a known recipient
• Wire transfers through a reputable bank or nonbank

What’s not safe:

• Sending funds to someone you don’t know
• Using an unidentifiable cash office or bank to send or receive funds
• Sending payment over the wire before your transaction is complete

How to avoid wire fraud

You can avoid scams by confirming when, why, where and to whom you’re wiring the money. There are resources online to help identify common scams, but here are some added tips:

• Make direct contact with a known recipient, either by phone, text or email, and confirm details, including amount, location for pickup and method of transfer.
• Use a reputable bank or cash office.
• Keep confirmation information safe and secure.
• Do not send payments to anyone you don’t know. If you receive an unexpected request, confirm the details with the sender.
• If something feels wrong with a request, follow your instincts, ask questions and research the request.

If you receive a suspicious request or you’ve been a victim of a fraudulent transaction, you should submit a complaint with the Federal Trade Commission, contact your local police or your state attorney general to report the scam.

Wire transfer vs. ACH

ACH, or Automated Clearing House, is another trusted way to move funds electronically. These transactions use a bank routing number and account number. A wire transfer is a single, direct payment with ACH transactions, also called electronic funds transfer or EFT. However, banks batch transactions together and process them daily to help keep costs down, while ensuring timely transactions. ACH payments are a substitute for paper checks and can be used to pay bills once or scheduled regularly. You can also use ACH to receive credits, including government benefits, and for payroll direct deposits.

ACH transactions typically have much lower fees than wire transfers. Some banks don’t charge a fee while others charge as little as $1 per transaction. Rates will vary by institution and if the payment is incoming or outgoing and it can take a couple of days for funds to become available. Alternatively, funds from wire transfers are almost immediately available.

Alternatives to wire transfers

Besides ACH transfers, there are additional alternatives to wire transfers:

• PayPal and other online cash sites- Move money from your bank account or credit card to another person’s account or mobile wallet.
• Personal check, cashier’s check or foreign currency check- For domestic transactions, personal or cashier’s checks are fast and reliable, but won’t work for transactions overseas. Some banks offer a foreign currency check, which is issued in the currency of the intended country, and can be cashed locally, but may incur fees.
• Open a joint bank account- If you regularly send money to a friend or family member, such as a child or dependent adult, a joint bank account is a good way to transfer money from linked accounts and typically comes with no fees. Money can be easily moved between accounts and completed via your local branch, website or mobile app.