I recently read about an ACH transfer or bank transfer. But what is it?
An ACH transfer is a popular method of sending or receiving money electronically. It is also widely used for paying bills online, and for direct deposit of salary.
Why is it called ACH transfer?
ACH stands for Automated Clearing House. The money transferred is cleared through the Automated Clearing House network, hence the name ACH transfer.
How does an ACH transfer work?
There are two ways. Money could be pulled from your account, which happens when you set up recurring payments like an electricity bill payment. Or money could be pushed from your account, which happens when you initiate a specific transfer, like sending money to a friend.
How long does an ACH transfer take?
It takes 2-5 business days.
How much do ACH Transfers cost? What is the fee?
Banks usually do not charge anything for ACH transfers – it’s free!
What are the advantages of ACH transfers?
Did you not hear the free part? Apart from being free, they are also way more convenient than writing and mailing checks. Recurring ACH transactions like automatic bill payments also help you avoid any late fees.
Are there any disadvantages of ACH transfers?
Since ACH transfers takes 2-5 business days, they may not suit all money transfer needs. Also, usually there are daily and weekly limits on ACH transfers imposed by banks.