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What You Need to Know About Wire Transfers


What You Need to Know About Wire Transfers

When speed is a priority, a wire transfer is the way to go. Thanks to technology, you can send money electronically through a bank network and it will be received instantaneously.

Wire transfers are not to be confused with ACH (Automated Clearing House) transfers. They do share some similarities -- both are done electronically and require bank accounts.

"One key difference is speed. Once a wire transfer has been authorized, the receiver has access in minutes, but with ACH it’s typically the next day," explains Viveca Ware, executive vice president regulatory policy for the Independent Community Bankers of America.

Wire transfers come with a price tag, typically $35 for an outgoing and as low as $5, but can be $10-$15, for incoming transfers, to cover the cost of labor associated with the transaction, says Ware. There is no charge for ACH.

"Sometimes the fee is waived depending on the customer’s relationship with the bank," she adds.

Translation: the big money gets a break. For example, CIT Bank offers free outgoing wire transfers for customers with balances of at least $25,000.

Wire transfers make sense for one-time events, where there is significant money involved, like a purchase of a car or home, "Whatever transaction where finality and speed are important," says Ware.

"Wire transfers can be used to transfer money to another individual or business, including banks, like for funding a CD," says David Bakke, a financial columnist with MoneyCrashers.com.

You can fund a mature CD with a wire transfer and also transfer money from our account to another person’s account (regardless of the financial institution). Unlike an ACH, because an ACH is done by a vendor, or someone or company with a program required to process ACH. They can’t be done by individuals, says Leslie Tayne, an attorney specializing in financial issues for the Law Offices of Leslie Tayne.

"Be aware that with wire transfers once you transfer the money it is gone, but with ACH, you can always pull it back if the amount is wrong, or was not authorized. ACH has more protections in a way,"

ACH is usually for a recurring transaction like direct deposit of payroll. It is also usually done when there are multiple payments. ACH may also require money in reserve, points out Tayne.

Despite the $35 fee, wire transfers can be money well spent. "Especially if you’re doing a cross border transaction, a wire transfer is much better than dealing with a foreign check,"says Susan Grant, director of consumer protection for the Consumer Federation of America.

For sure, wire transfers are easy and convenient, but like any financial transaction, there are a few things to keep in mind.

Ask questions. "Find out if there are fees and how much and be sure that the amount of money coming out of your account is the right amount," says Grant.

Find out what it takes to get a fee waived, like if you need to have a certain balance, or multiple accounts, whatever the case may be. "In a very few select instances, some banks offer premium accounts where there’s no fee for incoming or outgoing wire transfers," says Bakke.

Shop around. While most banks charge a fee for incoming wire transfers, Bakke says some don’t, like Ally, Discover and Everbank. Credit unions also typically don’t charge for incoming wires, says Tayne.

No do-overs. "Be aware that with wire transfers once you transfer the money it is gone, but with ACH, you can always pull it back if the amount is wrong, or was not authorized. ACH has more protections in a way," says Tayne. "Try to avoid using online wiring like a PayPal because it can take more time for the money to clear, whereas, the wire is more likely to hit the same day if you go through your bank."

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Comments
Anonymous
Anonymous   |     |   Comment #1
I don't use wire transfers any more because they depend on human interaction.
* A wire transfer can take a couple of days, especially with a small institution, because there is often only one person who is authorized to do them on the sending end and only one person authorized to process them on the receiving end.
* Never do two wire transfers with the same amount. One major financial institution sent both of them to the same credit union, instead of sending to two different CUs as instructed. The receiving CU simply dumped the extra 100K in savings. I should have done 99K and 100K.
* FedExing a cashier's check costs the same and is more reliable, IMO.
Anonymous
Anonymous   |     |   Comment #2
I do not use wires anymore, unless that is the only option.
I use fax to send a copy of the check filled to the receiver and the bank does check 21 transfer and in an instance the money are pulled from my account and to the senders account. It cost me the phone call (there was no toll free number available) charge to instruct the other side to do check 21 on the received fax.
Anonymous
Anonymous   |     |   Comment #4
I'll try again...Soooooooooooo, there is still a reason to use a fax!  I assume it can also be scanned and attached to an email to the receiver bank AND all the banks have agreed to use check 21 and, if not, a "substitute check" is created.  Right?
Anonymous
Anonymous   |     |   Comment #5
A fax has special legal status for being as good as the original document. It's kinda a lame distinction nowadays given that a scan is much higher quality as a fax can originate in other ways (besides an a scan by a physical fax machine) that are just as easy to forge (and a fax can be easier given the low quality).

I never imagined a bank accepting a fax for a deposit. The time I used a wire was to transfer CD funds and I didn't have an account to write a check from. At the time I read warnings about how intermediate banks can take a cut from the funds. 
me1004
me1004   |     |   Comment #6
A fax is more secure than an e-mail. And bottom line is that it is up to the bank, not you. If the bank won't take things via e-mail, but will via fax, then fax is how it goes. Not all banks will take e-mails, and those that do only started to in the past couple years. 
Anonymous
Anonymous   |     |   Comment #7
I agree with you, I have done similar faxes to a brokerage accounts and it was faster than a wire (actual time was 22 minutes) and at no cost to me or anyone else in the transaction and it was secure as per the broker. You have to call and arrange such transaction in advance if you like to complete smoothly.
lou
lou   |     |   Comment #8
Had no idea that banks will accept faxes (copy of the check). Do you need to fax the side of the check with the endorsement? Do all banks  do this?
lou
lou   |     |   Comment #9
I mean the opposite side of the check.
Anonymous
Anonymous   |     |   Comment #11
#8,#9, no you don't, just the front side is needed.
MidAtlantic
MidAtlantic   |     |   Comment #10
What a sad reflection on our (pre-historic) banking system. In the UK, where I worked for many years, they introduced a "Faster Payment" system in 2008 where you can electronically transfer up to 100,000 GBP (say $170,000) in hours. It can be done on-line with no human intervention and no charge.