ACH vs. Wire Transfer: Which Should You Use?

Using a bank might be one of the simplest ways to transfer money between different accounts. Your bank account could help you move money between friends and family members or between your own accounts.

But understanding the different transfer types your bank account may support is important. You may have heard about ACH transfers and wire transfers, but which should you use to move your money? Depending on the situation, you might consider using one option over the other.

See how both methods work and learn about a few alternatives as well.

What is an ACH transfer?

An ACH transfer is an electronic transfer of funds between banks and credit unions. It’s made on the automated clearing house network, a U.S.-based system that helps process electronic payments between consumers, small business owners, and government institutions. The National Automated Clearing House Association (NACHA) oversees the ACH system.

Common types of ACH transfers include direct deposit, electronic check, and direct payment. The ACH network had more than 29 billion payments, with a total value of over $72 trillion in 2021.

How do ACH transfers work?

You typically initiate an ACH transfer through an account you have with a financial institution. This could be through the use of an ACH credit or ACH debit.

An ACH credit is when you “push” funds from one account to another, such as an employer using direct deposit to move funds into your bank account. An ACH debit is when you “pull” funds from one account to another, such as allowing your cell phone service provider to automatically take money from your account each month for bill payments or recurring payments.

For all ACH transfers, you typically need to provide your banking information, including your name, bank name, account type, account number, and routing number. The same would be true for another recipient’s account and their receiving bank account information. Additionally, their bank account might need to be with a U.S.-based financial institution or a supported institution abroad, as the ACH system has limited support for international transfers.

ACH transfer fees

ACH transfers are typically free for the average consumer, which means you likely wouldn’t have any fees using ACH to transfer money. But it could still depend on the financial institutions involved in the transaction.

Most major banks don’t charge fees for internal transfers or transfers between accounts they provide. In some cases, you might have to pay a small fee if you want to do an external transfer or transfer money to an account at a different bank. Choosing a faster transfer option could also incur a fee.

What is a wire transfer?

A wire transfer is another method of transferring funds electronically. It’s not the same as an ACH transfer, but the end goal of moving money between accounts is similar. Wire transfers typically require less time to complete than ACH transfers and often come with fees.

Wire transfers are initiated by the sender and don’t support the debit form. You wouldn’t be able to authorize your cell phone service provider to pull money out of your account using a wire transfer. However, on the plus side, you could use wire transfers domestically or internationally with ease.

Learn how to wire money online.

How do wire transfers work?

Wire transfers are initiated by someone wanting to send money to someone else. The sender provides instructions to their financial institution about the transfer, which often include:

• The recipient’s name
• The recipient’s bank name, account number, and routing number or SWIFT code, which is a code for their bank on an international banking network
• The amount of money the sender wants to send and the currency they want to use if it’s an international wire transfer

A domestic wire transfer could take as little as a few hours to complete. However, an international wire transfer might take two business days or more.

Wire transfer fees

Wire transfers often come with fees because they’re a quicker method of transferring money between individuals. It’s not uncommon for wire transfers to cost between $20 to $30 or more, though it depends on the financial institutions involved and the type of wire transfer.

The main differences between wire transfers are whether they’re domestic or international. Domestic transfers are made within the U.S., whereas international transfers involve another country. International wire transfers tend to take longer and may cost more, and in some cases, require going through several banks to reach the recipient. However, this process is automated, so you don’t have to worry about it.

What both transfer types provide

If you typically transfer money using banks or credit unions, you’ve likely heard of both ACH and wire transfers. These transfer options have a few differences, but they also have many similarities. You’ll find a few benefits with both transfer methods:

• Ease of use: You typically don’t have to do much to initiate an ACH transfer or a wire transfer. Apart from having a compatible account and providing the required information, there’s not much left for you to do. This is part of what makes these transfers so appealing — because they’re generally straightforward and you don’t have to handle any physical cash.
• Domestic availability: Both types of transfers have vast availability if you plan to move money between U.S. accounts. This is likely more than sufficient for most U.S. consumers who might not need international transfers.
• Security: ACH and wire transfers offer secure options for transferring funds, especially compared with sending money by mailing a paper check. One of the most significant security risks with these transfers is knowing to whom you’re sending money. ACH and wire transfer scams exist, so it’s likely best to transfer money only to people you know and trust. ACH payments could sometimes be stopped or reversed, but the same doesn’t typically apply to wire transfers.

ACH vs. wire transfers: key differences

When should you use an ACH transfer rather than a wire transfer, and vice versa? Consider their differences to figure out which type of situation would be better served by each transfer method.

Speed

How quickly do you want your money transfer to complete? Standard ACH processing times are typically a few business days. Expedited or same-day ACH transfers could be completed in a few hours or by the next business day but might cost a fee. ACH transfers are often sent in batches at certain times of the day.

Standard wire transfers typically have faster transfer speeds than ACH transfers and could reach recipients in a few hours. International wire transfers might take up to a few business days.

Cost

The fees you pay are one of the main differences between ACH and wire transfers.

Most ACH transfers are free unless you’re paying for expedited transfer services or your financial institution charges fees. But for most major banks, you likely won’t pay any fees for your standard ACH transfer options.

Because wire transfers typically have faster processing times than ACH transfers, expect to pay a fee for the convenience. Wire transfer fees often range between $20 and $30 or more, though it depends on your financial institution and whether it’s domestic or international.

Limit

Wire transfers typically have higher amount limits than ACH transfers, though it depends on each financial institution. This makes them an ideal solution for transferring large amounts of money, especially if it needs to be done quickly.

For example, it might be preferred to use wire transfers for certain real estate transactions, such as making a down payment or paying closing costs.

Coverage

The ACH network is a U.S. system for transferring money between financial institutions. This means the coverage for ACH transfers is across virtually all banks and credit unions in the U.S., but the same doesn’t necessarily apply to financial institutions abroad. You would have to check with each foreign institution to see if it offers ACH capabilities.

Wire transfers are set up for domestic and international use, so they have more worldwide coverage than ACH transfers.

Other ways of transferring money

Initiating ACH or wire transfers through your financial institution isn’t the only way to transfer money. Other options include cashier’s checks and money orders. But for more modern options, consider these alternatives to quickly and securely transfer money between friends, family members, and acquaintances.

Cash App

Cash App is a free financial app and payment processing service for sending and receiving money, as well as investing in stocks and bitcoin. Because it’s compatible with iOS and Android devices, you could download the app from the App Store or Google Play.

In-app transfers typically happen in real time, though transfers from your account balance to your bank account would likely take a few business days.

Learn more in our Cash App review.

Venmo

Venmo is a free payment app owned by PayPal, a payment service and financial technology company. Venmo offers similar services to Cash App, including sending and receiving money between friends and family members.

These types of transfers are typically immediate, but bank transfers could take a few business days. Venmo offers different payment methods, including using your Venmo balance, a U.S. bank account, a debit card, or a credit card.

Read our Cash App versus Venmo comparison for more details about the two apps.

Zelle

Zelle is an app that offers quick payment options for sending and receiving money between friends and family. It’s available in many different bank apps, including Discover, Bank of America, U.S. Bank, and Chase. It’s also available as its own app on Google Play and the App Store. Zelle is free to use, but your bank might charge a fee for its services.

You typically have options to send money using Zelle to almost anyone that has a U.S. bank account and a valid email address or U.S. mobile phone number. Transactions typically take a few minutes or less.

Read our Zelle review to learn more.

FAQs

Bottom line

Depending on your situation, you might choose to transfer money using an ACH or wire transfer. Wire transfers are typically quicker but often come with fees. ACH transfers don’t typically require fees, but they could take a few business days to complete. You might be more likely to use ACH transfers regularly, but it depends on your financial needs.

To help save money when transferring funds, consider bank accounts that don’t charge fees for ACH transfers and charge low fees for wire transfers. Check out our list of the best banks to find one that suits your financial needs.