ACH transfers – everything you need to know

Learn all about ACH transfers and how to transfer money between banks. Bank of America, Chase and other ACH transfers explained. 

What is an ACH transfer?

When it comes to moving money between bank accounts, everyone has heard of the wire transfer. But did you know that there’s another way to move money from one bank to another and it’s called an ACH, or an automatic clearing house transfer? The payment system used to complete ACH transfers is regulated by the National Automated Clearing House Association and the Federal Reserve, so you can be certain that the money you send through these transfers will securely arrive in the designated account. 

ACH transfers vs. wire transfers – what’s the difference?

There are a few differences between ACH transfers and wire transfers and you should be aware of them when choosing a transfer type. As you might know, wire transfers can be pretty expensive – the fee is usually anywhere from $15 to $50. In contrast, ACH transfers are significantly cheaper, most of the time there’s no fee or it’s just a few dollars. On the other hand, wire transfers are usually much faster – ACH transfers often take several days to complete, while wire transfers can be available in the recipient’s account at the end of the same day. Plus, most of the time you can’t transfer money internationally using ACH payments. There’s also usually a limit set by your bank on how much money you can transfer in one day using ACH payments. 

Advantages of ACH transfers

As mentioned previously, the main advantage of ACH transfers is their low cost. For instance, ACH transfers at most major US banks including Capital One, Citi, USAA, Chase and others are free and take several business days to complete. Some banks, such as Bank of America, make incoming transfers free while outgoing transfers cost $3. 

Small businesses can usually get the most out of using ACH transfers. Since these transfers are automated, if you use ACH transfers to send payments to your employees and vendors, you can usually negotiate a better deal with vendors. Plus, using ACH transfers can save you lots of time and headache, helping you streamline your payroll and tax payments.