Wire transfers have become the bread and butter of banking in the digital age, but most people don’t know what the term actually means. We wanted to answer the questions: how does a wire transfer work, why is it a good thing, what are the alternatives to a wire transfer and more.
Wire transfers occur when funds are transferred electronically. They tend to be fast, as funds can transfer between banks and financial institutions almost instantly. They also enable people to transfer funds internationally very quickly. The term “wire transfer” comes from the earlier days of electronic banking, when information about transfers was literally sent over telegraph wires.
The funds are debited from your account as soon as you initiate the transfer, which enables the wire transfer to be completed quickly. This also tends to make it difficult or impossible to reverse, which means it’s important to make sure you are transferring to the correct account before initiating it. You may be able to cancel international wire transfers within a short window after initiation, but you should check with your bank and be sure to double-check the account information before initiating the transfer regardless.
There are also wire transfer fees that are assessed, which are lower for domestic transfers and slightly higher for international transfers. These are assigned by the banks involved in the transfer though, and average between $15 and $45. Check with your individual bank when you initiate the transfer for the exact fee.
On average, wire transfers take no longer than 24 to 48 hours, but international transfers can take up to 5 days to be completed. You should be able to track your money once it is debited though, to see how far along the process the wire transfer is. Luckily, unlike with other transfer services, the money is available right away once it arrives at its destination, and the recipient doesn’t have to wait for a bank hold to clear to pick up the funds.
Wire transfers can be a great option for sending money home to your family or friends. They allow you to transfer large sums of money much more quickly than if you use other methods, and they tend to be incredibly secure. The money moves directly from bank to bank, leaving little room for error or scams.
On the downside, there are higher fees associated with these transfers and you do have to have the money in your account before you can initiate a wire transfer. Because the money is removed from your account immediately, you aren’t able to cancel the transfer once you initiate it in most cases. You and the recipient also have to have access to a bank an account at that bank to complete the transfer.
As long as you are transferring a large enough sum that the fee is a less significant a portion of the money, you are positive of the account you are sending the money too and you have sufficient funs though, this is a secure, reliable way to send money to your loved ones quickly.
There are several alternatives to wire transfers if you want to send money to another bank or account. Money transfer services like Western Union operate independently from banks and also happen quickly. These services are great if you want to send money to someone who lives in an area without easy access to a bank. You take money to the location along with identification, and the recipient brings identification and walks away with cash.
ACH transfers are also money transfers that occur between banks and financial institutions. These take a day or two, and tend to be slightly slower than wire transfers, but can be reversed in more cases than the first. These transfers move through the Automated Clearing House network instead of via the SWIFT code system.
Finally, person-to-person services tend to be easy, inexpensive, and easy to use from your phone. These are ideal if you are transferring smaller amounts to your friends or family, and include services like Venmo, Paypal, Zelle, Popmoney, and Remitbee. These services range in speed from instantaneous to a couple of days, and each one will differ in terms of strengths and weaknesses. We recommend researching each service to see which one fits your needs best before choosing one if you want to go this route.