Since many people are used to swiping their debit cards and seeing the money immediately deducted from their available balance, there seems to be this assumption that the transfer of funds between banks happens just as fast. However, this is typically not the speed of transfer between banks. In most cases, it takes several days to complete a transfer. There are different types of money transfers, and I’ll touch on each one here along with expected timeframes.
Wire Transfer
If you don’t know what a wire transfer is, you’ve probably never done one. This is different from an ACH transfer, which I’ll cover next. A wire transfer is a direct transfer from one bank to another via the bank’s wire department. If you initiate the transfer before the bank’s cutoff time for the day(usually 3pm local time), then the funds will be available at the receiving bank on the same day. Banks usually have specific times throughout the day when they batch all pending wires together and send them all at once(such as 10am, 12pm, etc.). So, depending on when you start your wire, the funds may be available at the other bank anywhere between 30 minutes to 3 hours.
The big draw to this type of transfer is that it DOES complete on the same day unless you initiate it past the cutoff time. The big drawback is you are going to pay a fee for sending the wire, and the beneficiary will pay a fee to receive it. Fees normally range between $10-$35. If you send a wire internationally, it will take about a week to arrive in most cases. Those are NOT same day receipt. Some companies require this type of transfer in certain cases, like paying off a mortgage or another big loan. Also, most transfers over $50,000 will likely need to be sent this route.
ACH Transfer
This is similar to a wire transfer, but differs in several ways. I’ll cover some, but not all, of the differences here. You usually only pay a fee here if you are the one who is paying for the privilege of sending/receiving ACH transfers. The business entity that’s involved is likely paying for the service. For example, if you are on a company website and trying to make a payment or donation, you may complete a form online that asks for your routing and account number. This is an ACH transfer. The person completing this form rarely has to pay to use it. If you don’t own a business, you probably aren’t able to accept ACH transfers to your bank account outside of a P2P app(more on that next). ACH transfers usually take between 2-4 days to complete. Think of this like a toned-down version of a wire transfer without the same-day speed or the fees.
P2P Transfers (person-to-person)
This is simply an ACH transfer between two individuals. Whereas one of the parties involved in an ACH will be a business, that simply isn’t the case here. A business is used to transfer the money, but the sender and receiver are both human beings. Examples of P2P providers include Venmo, Zelle, PayPal, etc. If you’ve ever initiated a person-to-person transfer through your online banking, then you’ve used this option before. It takes the same amount of time as a typical ACH, 2-4 days on average. The great thing about this option is that you can quickly pay another person directly without giving your bank account information. While most of these apps show an instant transfer of funds on your available balance, it actually takes a few days to finalize. I’ve seen some of these payments get rejected and it takes a couple of days to work that out. Don’t panic though: if someone is paying you via P2P for an item you’re selling, it’s probably ok. Zelle recently ran into a lot of trouble with this due to allowing fraudulent activity, but I’ve personally never had an issue using any of these. I’ve even accepted a Venmo payment at a garage sale and it worked out fine.
Check deposit
This is primarily dealing with people who deposit a paper check into their bank(which happens more than you might think).
From what I’ve observed, people operate under the impression that when they deposit a paper check into their bank account, the funds will immediately be available to them at their bank while being simultaneously debited from the account at the other bank that the account is drawn on. This simply isn’t the case. At 99% of banks, when you deposit a check into your account, the funds are not available until the next business day. Here’s the most surprising part: the money won’t be debited from the other bank for 2-4 days, even though the funds are available at your bank in one business day. It simply isn’t an instant transfer. It takes several days to complete. This is also why if you’ve ever deposited a check that gets returned, you won’t know about it until several days after the deposit. The paper check is kept at the deposited bank, and an electronic copy is sent to the original bank to request the funds, but that takes a few days.
There are some machines that some retailers use to determine if the check you hand them is any good or not. Those transactions process immediately because the 3rd party is guaranteeing the funds. That’s a different scenario than depositing a check at a bank, but I wanted to mention it here since it’s relevant. I will add that check writing & depositing is WAY more common than you think. They are still extremely common for exchanging money.
Cash
Cash is instant. When you deposit it into your account or withdraw it, the transaction happens immediately. If you take cash from one bank and deposit it into another, it shows up immediately on both sides of the transaction.
To summarize: money transfers between banks can range from immediate to same day to multiple days later, depending on the type of transfer you complete. My main reason for wanting to write this post is so you’ll know that it usually isn’t as fast as you may think. Even “instant” coffee takes a few minutes to make if you don’t have boiling water ready.
