Bank transfers: how they work, how much they cost, plus a few tips to cut costs

Bank transfers: how they work, how much they cost, plus a few tips to cut costs



The days of paying a friend or family member back in cash are long gone. If you’re looking to send money to a loved one or shift money around in your own accounts, there are many convenient options available for moving those funds from one bank to another. 

Here’s what you need to know about bank transfers, plus expert advice on choosing the best method for yourself.

How bank transfers work 

Bank transfers are a fast and convenient way to get your money from point A to point B electronically. These types of transfers can be done through wire transfers or through a mobile payment app.

To complete a transfer, your bank will communicate directly with the receiving bank to share account details, the amount you’re hoping to send, and information about your recipient. Whether a wire transfer or mobile app payment is better will vary depending on where your money is going, how much you’re sending, and how quickly you need those funds to arrive. 

How to transfer money from one bank to another  

Say you have a checking account with a bank that has a physical branch near you, but you’ve opted for an online-only savings account. You can transfer money from your checking to your savings through an external transfer. Many banks allow external bank transfers from one of your accounts to another without charging you any fees—although your bank may still have limits on how much money you can transfer, or it will cap the number of transfers you can make within a given period.

You can complete an external transfer in person at your bank’s local branch over the phone or online by visiting your bank’s website or logging into your bank account via their mobile application. You’ll need to provide your bank with the routing number of the bank you’re transferring money to, as well as your account number to link the two accounts and complete the transfer.

Other ways to transfer money 

External transfers aren’t the only way to transfer money from one bank to another. A few other alternatives you might consider include: 

Mobile app/peer-to-peer transfers  

If your bank doesn’t provide external transfers, online peer-to-peer payment platforms like PayPal, Venmo, Zelle, Cash App, and others allow you to send money from your bank account to a friend’s, or to pay for a bill or service. 

You’ll need to link your bank account to the mobile application by providing your card or account number and routing number. Many applications will offer a fee-free option for mobile transfers that can take anywhere from one to three business days. Although, you may have the ability to expedite the process and transfer the money automatically for a fee. 

Wire transfers  

Wire transfers are one of the fastest methods for sending money, but they can carry some pretty steep fees.  

On average, wire transfer fees can range anywhere from $0 to $50 depending on where your money is going. The recipient may also be required to pay fees to receive their funds, as well as potential exchange fees if you’re wiring the money to a location abroad. 

“Transferring money overseas can come with a hefty price tag,” says Jairo Riveros, managing director of the Americas and global head of strategy at Paysend. “If you choose to use a local bank abroad to exchange or transfer money, they will usually charge a currency conversion fee of about 1% of your total purchase.”

Wire transfers can be completed online or in-person through a bank or non bank provider like Western Union, MoneyGram, or Wise. You’ll need to fill out a form that includes information about yourself, your bank account, the recipient’s account, their full name, account, and contact details. 

Once you’ve completed these steps, you’ll receive a confirmation number on your receipt that you can use to track the status of your transfer. It’s also important to remember that wire transfers cannot be sent on weekends or bank holidays and may have a weekday deadline set by your bank.

Writing a check  

If you’re looking for something else beyond the above-mentioned options, you can go the traditional route and write a paper check. With this, you can choose to deposit it in person at a bank branch—or you can deposit it through your bank’s mobile app.

When using this method, you’ll want to keep in mind that it may take your check a few days to clear. 

The takeaway  

Choosing the right method will ultimately depend on where your money is going and the purpose of the transfer. A few key factors to consider: 

Speed: Processing can vary from a few seconds to a few days, so consider the purpose of the transfer and how quickly you need the money to reach its destination.

Fees: “Some service charges help cover some of the risk that the banks take on,” says Simon Zhen, chief research analyst at MyBankTracker.com. “Expensive service fees may require more work on the part of bank staff to process.” If you hope to avoid pricey fees, consider a more affordable option like a mobile payment application. Some applications are low-fee and can get your money where it needs to be within minutes.

Restrictions: Pre-pandemic, rules at the federal level limited the number of transactions and withdrawals you could make from a savings account. Those limitations have since been relaxed, although your bank may have their own rules in place and could mean extra charges.

EDITORIAL DISCLOSURE: The advice, opinions, or rankings contained in this article are solely those of the Fortune Recommends editorial team. This content has not been reviewed or endorsed by any of our affiliate partners or other third parties.

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Rachel Meadows

Rachel Meadows

Trending topics news writer who enjoys cooking, walking her dog and travel.