How To Transfer Money From One Bank Account To Another
Transferring money between bank accounts has never been easier, but it's important to choose the transfer method that makes sense for your particular situation.
Are you seeking information about how to transfer money from one bank account to another? Whether you want to transfer funds from your checking account to a high-yield savings account, you want to transfer a large sum to someone else’s bank account for a used car, or you simply want to split a restaurant bill with a friend, there are more ways than ever before to move money from account to account. And the best small business bank accounts will support most or all of them.
From mobile payment apps to wire transfers to good old-fashioned checks, the right money transfer method for your situation will depend on how much money you want to transfer and how quickly you need the transfer to be made. Let’s go through your transfer options. Afterward, check out our guide to business banking if you’re curious about other aspects of business financial management.
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How To Make A Bank Transfer: 5 Methods
From old-school methods like paper checks to 21st-century options like Venmo and Zelle, there are a number of ways you can transfer funds from one bank account to another. Let’s examine your transfer options and the circumstances under which each option should be used.
1. ACH Transfers
- Speed: 1-3 business days on average
- Cost: Free when made between two bank accounts you own; fees range from $0-3 for standard ACH transfers to $7-10 for next-day transfers
- Transfer Limit: Varies; generally around $1,000-10,000 per transaction, $2,000-25,000 per day, and/or $5,000-25,000 per month
An ACH transfer — also known as an electronic funds transfer or simply a bank transfer — is a secure, automated way to transfer funds between bank accounts. ACH payments are typically used for automatic bill payments and are often used for recurring B2B payments, but can also be used to transfer money between two bank accounts you own or between your bank account (business or personal) and that of another person or business.
Keep in mind that ACH transfers can generally only be made within the US. Some banks now offer global ACH payment services, but not all banks and countries support this, and a number of parties are required to coordinate the transaction. Another factor to consider: ACH payments are not processed on weekends or bank holidays.
ACH transfers are ideal when you want to transfer up to a few thousand dollars domestically for a very low cost, and when time is not of the essence.
2. Wire Transfers
- Speed: Same day (sometimes in just minutes) for domestic wire transfers, 1-4 business days for international transfers
- Cost: $0-35 for domestic wire transfers, $35-55 + other fees for international wire transfers
- Transfer Limit: Varies; generally $100,000-250,000 per day for individuals (can be much higher for businesses)
A wire transfer may superficially resemble an ACH transfer in that it is a means of electronically transferring money from one bank account to another. However, wire transfers actually predate the ACH network by about a century, and they differ from ACH payments in several key ways.
Wire transfers are great for sending large sums of money rapidly. Wire transfer limits are generally very high for individuals, but are often higher still for businesses, making wire transfers a great way to settle multi-million-dollar business transactions. Plus, wire transfers are easily made across borders and are ideal for international money transfers.
The downsides? Wire transfers are considerably costlier than ACH payments and involve fees at both the sending and the receiving end. In particular, international wire transfers involve currency conversion fees (among other fees) — you may end up paying 3-4% of the total transaction in an international wire transfer.
Additionally, wire transfers are usually irreversible, so you may have little recourse if you send money to the wrong account or for services that are not rendered. Plus, while you can request ACH payments (one-time or recurring) via bank invoice templates, this is much less commonly done with wire transfers. As for availability, though wire transfers go through very quickly, you can’t make them on weekends or bank holidays, just as with ACH transfers.
Wire transfers and ACH transfers both involve more complexities than can be covered in this article, which is why the subject of ACH vs wire transfers is worth further research if you need to transfer a large sum of money.
3. P2P Apps
- Speed: Most offer free transfers in 1-3 business days & instant transfers for a fee
- Cost: Typically free for standard (1-3 day) transfers — instant transfers usually cost 0.5-1.75% of the transaction amount
- Transfer Limit: Varies; transaction limits are generally lower than for bank/ACH transfers and much lower than for wire transfers
Most people are familiar with P2P payment apps these days — most of us have split a restaurant bill with friends using Venmo or paid a vendor at a farmer’s market with Cash App. These apps can be used to transfer money between bank accounts, both in cases where you own both accounts and in cases where you own just one.
The convenience of transferring money with P2P apps is obvious — you don’t have to coordinate anything with your bank, and you have the option of making free transfers if you don’t mind waiting 1-3 business days for a transfer to go through. On the other hand, transaction limits are lower than those of ACH bank transfers and wire transfers, and these apps can generally only make transfers between accounts within the US.
I should note that Zelle works differently than other P2P payment apps in that it does not involve a digital wallet. Instead, Zelle is offered directly by many US banks and allows for direct and nearly instant money transfers, which are entirely free. Additionally, transfer limits are generally higher than those of other P2P apps as well, making the use of Zelle for business an attractive proposition for many business owners.
However, not all banks support Zelle, payments are often not cancellable, and fraud protection is nonexistent. The latter two factors have resulted in the widespread use of Zelle for fraudulent purposes.
4. Money Orders
- Speed: 1-2 business days
- Cost: $0.35-$2 per transaction
- Transfer Limit: $1,000 per transaction
A money order is an older form of payment that is issued in the form of a paper check. The difference is that, unlike a check, the payment is guaranteed with a money order. They can be created at banks, convenience stores, post offices, payday lending offices, and many other types of institutions.
Due to their low transfer limits and the need to physically acquire them, money orders are not commonly used to transfer money between bank accounts. However, they can be useful in certain situations, such as when you want to transfer funds to someone without a bank account.
- Speed: 1-2 business days (sometimes up to a week)
- Cost: 0-25 cents per check (no fees charged for the actual transfer)
- Transfer Limit: None
Checks can still be used to transfer funds between bank accounts you own or between your bank account and that of another person or business. The obvious benefit of transferring money via a check is the fact that you’re only limited by the amount of money in your account. Plus, checks establish a paper trail, and it’s very difficult for someone who has stolen a check to actually cash it. And with the rise of mobile banking apps, it’s quite easy to deposit a check you’ve written to yourself from another account — no trip to the bank necessary.
The downsides? You actually have to sit down and write out a check, which can be a bit of a pain, especially for younger folks unfamiliar with such legacy forms of payment. And if you’re transferring funds to someone else’s account via check, you’re relying on the USPS, which has faced well-publicized challenges as of late.
Be Aware Of Savings Account Withdrawal Limits
Although the Federal Reserve eliminated its savings account transaction limits in April 2020 that had previously restricted people from making more than six withdrawals and transfers to/from savings accounts per statement cycle, some banks still retain this six-transaction limit, while others retain a transaction limit but have increased the number of transactions allowed per statement cycle.
If you intend to transfer money to/from a savings account on a regular basis, be aware of what your particular bank or banks permit in this regard. If you’ll be making fewer than six transfers per statement cycle, though, you’re good to go.
The Bottom Line On How To Make A Bank Transfer
If you intend to transfer money between bank accounts you own or if you seek to transfer funds into the account of another person or business, the good news is that you have more methods at your disposal than ever before.
Even older methods of transferring funds, such as checks, have been made easier and more convenient by 21st-century advancements like mobile banking apps that allow you to bypass a trip to your local bank branch.
However, not all money transfer methods are created equal. All such methods have their costs, limits, and pain points. But if you’re familiar with how each payment method works, you can choose the method that makes sense for your particular business (or personal) situation.
For more information about business banking, whether it be how to open a business bank account, a primer on how to choose a bank for your business, or an explanation of the differences between business and personal bank accounts, Merchant Maverick has you covered.