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Wire transfers and bank transfers are similar in that they move money from one bank or financial institution to another, either internationally, domestically, or both.Understanding the differences can help you determine which type of transfer is best for your situation. Let’s take a closer look at the differences between wire transfer vs bank transfer and what makes sense for the transactions you are making.
What Is a Wire Transfer?
A wire transfer is an electronic method of sending money from one bank or financial institution to another. Unlike traditional bank transfers, wire transfers are typically processed quickly — often within the same day — making them a reliable choice for time-sensitive transactions. They are commonly used for large or international payments, real estate transactions, and business dealings that require secure and verifiable funds movement. Wire transfers can be initiated in person at a bank, through online banking, or via third-party services.
How Wire Transfers Work
Wire transfers work by electronically moving funds from one bank account to another using secure networks like Fedwire or SWIFT. The sender provides the recipient's name, bank account number, and banking details. Once initiated, the sending bank transmits the payment instructions to the receiving bank, which then deposits the funds into the recipient's account. Domestic transfers often clear within a day, while international ones may take longer. Fees typically apply, and transactions are usually irreversible once processed.
Types of Wire Transfers
There are two different types of wire transfers, domestic and international.
Domestic Wire Transfers
A domestic wire transfer is one that takes place between two different financial institutions within the same country. A code or the recipient’s branch number is usually required.Domestic wire transfers are usually cleared the same day.
International Wire Transfer
International wire transfers allow money to be sent from an account based in one country to a bank or financial institution in another country, usually using the SWIFT network mentioned above. International transfers are also known as remittance transfers.International wire transfers usually take two business days. The extra time is required because the transaction usually must be approved in the receiving country by a domestic clearinghouse.
What Is a Bank Transfer?
A bank transfer is also an electronic transfer of money from one bank account to another. In the U.S., most bank transfers are made using the Automated Clearing House or ACH network. ACH is a collection of more than 10,000 financial institutions. It acts as a financial hub for deposits and payments for businesses, consumers, and government transactions.Nacha, formerly known as the National Automated Clearing House Association, is a self-regulating institution that oversees the ACH system. The association develops and administers the rules concerning electronic payments.Bank transfers often happen on the same day, but may take two to three business days to clear.
How Bank Transfers Work
A customer initiates a direct payment or direct deposit via debit or credit using the ACH network. This person’s bank, also known as the originating depository financial institution, takes the ACH transaction and puts it together with other ACH payments or deposits.An ACH operator receives the batch of ACH transactions, sorts through the batch, and makes the transaction available to the recipient’s bank or financial institution. When the transaction appears in the recipient’s bank account, the process is ended.Recommended: ACH vs Wire Transfers: What Is the Difference?
Differences Between Wire Transfers and Bank Transfers
Although the end result is the same, there are several differences between wire transfers and bank transfers. Knowing the pros and cons of each can help you determine which one to use in various circumstances.
Usage
Bank transfers work behind the scenes when you make electronic funds transfers (EFTs) from one account to another, autopay bills, write eChecks, and receive direct deposits. All of these transactions go through the ACH network. You’ll likely need your bank account routing number for all of these transactions.Direct debits — when a third party like your gym or life insurance company pulls money from your account — are also considered bank transfers and executed through the ACH network. Bank transfers are also at work when you use third party payment apps such as PayPal, Zelle and Venmo.Alternatively, because of relatively high fees and high transaction amount limits, wire transfers are best suited for large business transactions. And, as mentioned above, wire transfers are often best for international transactions.
Risks Involved
Wire transfers, while fast and reliable, carry risks such as fraud and irreversibility. Once a wire transfer is completed, it cannot be canceled or reversed, making it a prime target for scams. If funds are sent to the wrong account or under false pretenses, recovering the money can be difficult or impossible. Additionally, international wire transfers may encounter delays, currency conversion errors, or additional fees due to intermediary banks.Bank transfers, especially those processed through Automated Clearing House (ACH), typically take longer and are somewhat less risky due to the ability to stop or reverse certain transactions in specific circumstances. However, risks still exist, including incorrect account information, insufficient funds, or unauthorized transactions. In business or peer-to-peer transactions, bank transfer fraud or phishing schemes can result in lost funds, especially if users don't verify recipient details or fall for impersonation tactics.
Timing
Wire transfers are generally faster than bank transfers. Domestic wire transfers often process within a few hours on the same business day, while international ones can take 1–2 days. In contrast, bank transfers using the ACH system typically take 1–3 business days to complete, depending on the bank and timing of submission.Recommended: How to Transfer Money From a Bank to a Prepaid Card
Cost
You’ll likely pay less for bank transfers than you will for wire transfers.Most banks and financial institutions don’t charge for ACH transactions and those that do usually charge about $3 per transaction. (Of course, this can add up if you make several transactions per month, so it makes sense to check your bank’s policy.)Wire transfers, on the other hand, can cost anywhere from $35 for a domestic transfer to $45 for an international one. Depending on where the money is going, the fee may be even higher. The sender pays these initial fees. However, the recipient also may find a small fee for the transfer has been deducted from the total amount by the institution receiving the funds.
Amount Limits
Many banks have limits on bank transfers through the ACH network. A recent rule change has increased the possible limit to as much as $1 million per day, but most banks have limits that are much lower than that.Limits may be imposed daily, weekly, or monthly. Some banks have a daily limit and a monthly limit. In general, limits range from $3,000 to $10,000 daily. Some banks have different limits for outgoing and incoming bank transfers.It’s important to know your bank’s limits. You don’t want to be in a position where your monthly bill paying exceeds those limits and you find yourself getting hit with late fees for unprocessed payments. In addition, you want to make sure you can receive large deposits when necessary, such as payment for an auto sale or another big transaction.
System Used
As mentioned above, most wire transfers are done through the SWIFT or Fedwire transfer systems. Most domestic bank transfers use the Automated Clearing House, or ACH network.
Convenience
Bank transfers are usually more convenient than wire transfers for everyday transactions. They can be initiated online or through mobile apps, often without fees, and are ideal for recurring payments like payroll or bills. Wire transfers, while faster for large or urgent transfers, often require more steps, higher fees, and in-person verification.
Alternative Ways to Transfer Money
Money may also be sent via non-bank wire transfers using money transfer companies such as Western Union and MoneyGram. These can be used for both domestic and international transfers. Fees vary based on how you’re paying, where you’re sending money, and how much you’re sending. The transfer can take anywhere from a few minutes to a few days, depending on the transaction.
The Takeaway
Wire transfers and bank transfers are convenient, secure ways to make financial transactions from one institution to another. Although they are the same in many ways, there are important differences in costs, limits, and the way each transfer works that can help you determine which system is right for you.If you’re looking to open a bank account, consider a high-yield savings account. Lantern by SoFi’s online banking marketplace makes it easy to compare annual percentage yields and choose a bank account that’s right for you.Compare today’s high-yield savings rates including fees and balance minimums.
Frequently Asked Questions
Can I be swindled through a bank transfer?
What details are needed for an international wire transfer?
Do wire transfers go through immediately?
Is the limit on a wire transfer more than a bank transfer?
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About the Author
Walecia Konrad
Walecia Konrad is an award-winning financial journalist with 25 years of experience in print and digital media. She is a graduate of Syracuse University and specializes in the topics of health care, personal finance, and employer-sponsored benefits. Konrad's work has been seen on CBS MoneyWatch, The New York Times, Money, SmartMoney, BusinessWeek, and Forbes. She has been the recipient of both a Pearl Award for Best Web Publication of the Year and a National Magazine Award for Personal Service.
