In the past, we have talked about ACH or bank transfers and wire transfers. But they sound very similar. Can you please help me understand them better?
Both ACH transfers and wire transfers are ways to send or receive money electronically through your bank or credit union.
So what are the differences between ACH transfers and wire transfers?
The main differences are the time taken to transfer money and the cost. Wire transfers are much quicker, but cost more. On the other hand, ACH transfers are usually free but take longer. Additionally, wire transfers are irreversible, while ACH transfers can be reversed in case of fraud or mistakes like overpayment of salary by an employer.
Are there any other differences between ACH transfers and wire transfers?
While ACH transfers are only domestic, wire transfers can be both domestic and international. ACH transfers usually have a daily & weekly limit, whereas wires normally don’t have any upper limit. Also, only ACH transfers can be used while setting up recurring payments like automatic bill payment.
So, are ACH transfers better than wire transfers, or the other way round?
One is not necessarily better than the other – it depends on your money transfer needs. If you want to transfer money quickly or internationally, or have to transfer a large amount, a wire transfer is better. But if you are transferring money domestically and can wait a few days, or if you are setting up a recurring payment, an ACH transfer is the right choice.