What is the Difference Between an Automated Clearing House (ACH) and a Wire Transfer?

Electronic money transfers are the most popular way to send funds. They’re quick, they’re safe and they are reliable, making them ideal for nearly everyone. However, there is more than one way to send money from one account to the next.

Understanding the pros and cons of both automated clearing houses (ACH) wire transfers is especially useful, as these are the most popular choices that people use to move cash from one account to the next.

Wire Transfers

Wire transfers are used when sending money more quickly. They generally only take one business day to send money from one account to another. However, they are not completely computer-generated and often have to be reviewed to be cleared for use. This can sometimes add another day or two to the process, but generally, they are the quickest way to send money from one place to the next.

There is also a cost associated with using a wire transfer, which generally runs between $10 to $35 per transfer.

Wire transfers are most often used when you need the money sent right away, such as a down payment or when a bill is coming out right away and money needs to be there. Otherwise, you likely wouldn’t need to expedite the process and pay the fee.

Automated Clearing House (ACH)

These are a bit slower, taking two to three days to clear since banks clear these transfers in batches. The sooner you get it in, the quicker it will clear if you do so before the bank’s batch-approving day.

ACH transfers are popular because they do not cost a thing. If the recipients don’t need the money right away, then this is an ideal method.

There are many reasons to use ACH transfer methods, though the most common uses include setting up monthly bill payments or direct deposits for employees.

Both types of transfers are completely safe, but it is best to keep in mind that ACH transfers can be reversed. A reversal can be requested by the person that sent the money, giving them access to the funds once again. Wire transfers should always be checked for mistakes since it is not a process that can be undone.

Either transfer can be ideal depending on the needs of the user. For more information on which option might be best for your own unique needs, contact your local bank today.