Bank Wire Transfer Basics

What is a Wire Transfer, and Why Send Money by Wire?

Moving Money
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When you need to send money fast, a wire transfer is often a good choice. Wire transfers are immediate, reliable, and safe (assuming you're not sending money to a thief).

For some of the most important transactions in life – like the buying a home – wire transfers or cashier’s checks might be your only options. Why? The short answer is that the funds are available to the recipient more or less immediately.

What is a Wire Transfer?

A wire transfer is an electronic transfer of money. A traditional wire transfer goes from one bank or credit union to another using a network such as SWIFT or Fedwire. But the term wire transfer gets used for other types of transfers, so clarify the requirements if somebody asks for a wire transfer.

Other electronic transfers are described below. Usually, if somebody asks for a “bank wire,” they want the traditional bank-to-bank transfer. If not, a money transfer service or other electronic payment might be acceptable.

Speed of Wire Transfers

Wire transfers are popular because the money moves within one or two days. Within the United States, same-day transfers are possible, and international transfers take an extra day or two.

Cleared funds: because the money moves quickly, the recipient does not have to wait for funds to clear before claiming or using the money. In other words, there is generally no hold placed on money received via wire transfer.

For anybody selling merchandise or services, a wire transfer is safer than a check (because checks can bounce).

Processing time: wires can be completed in one day, depending on how early you submit your request to send money. It may take several hours for the receiving bank to show the wire proceeds in the recipient’s account – an employee typically just needs to flip a few switches.

You can generally hunt a wire down with a few phone calls if you're in a hurry to spend the money.

Money transfer services: if you’re not using a traditional bank or credit union, you might be able to complete a transfer in just a few minutes – the sender walks in with cash, and the recipient walks away with cash. This is possible with services like Western Union and MoneyGram.

How to Use a Wire Transfer

To wire money, just submit instructions to your bank. You’ll need to provide information about the recipient’s bank account, and you often have to use a special form provided by your bank (some banks let you do all of this online, while others require a signed form). For more details, see How to do a Bank Wire.

To receive money by wire, you’ll need to provide your bank account information to the person or business sending money. Ask your bank for “incoming wire instructions” to be sure you use the correct numbers. Again, the money generally moves in one day, but it might take an extra day for the funds to appear in your account (unless you call and have the process expedited, which might or might not be possible).

Fees are often around $40 to send a wire, and $10 (or free) to receive a wire transfer.

If you use your credit card to fund a wire transfer, you’ll pay cash advance fees, a higher interest rate, and fees for the transfer itself. It’s best to send a wire directly from your checking account.

Bank Wire Transfer Safety

When you wire funds, money goes from one bank to another, and then to the recipient’s account. Inside of the United States, that means each party to a wire transfer needs a bank account. To open an account, federal regulations require that banks verify your identity (among other things) and ask for a physical address where you can be found.

It is difficult to bank anonymously within the US, which limits thieves' ability to pull off a scam with a bank wire transfer. You can keep your identity from individuals and businesses to some degree, but law enforcement generally has the ability to find you.

That said, scams involving wire transfers are not unheard of. Thieves only need to take control of somebody's bank account for a few days to get cash or send the money elsewhere. The main risk is that you send money, the thief withdraws cash (or wires it to a different account, possibly overseas), and you don't realize you've been scammed until it's too late to recover the funds.

If somebody asks you to wire funds, think carefully about who you're sending to. Some transactions are especially risky: For example, if you wire money to an office that pays out the proceeds in cash (such as a retail "money transfer" shop in a strip mall, Western Union, or similar), it is harder to verify who got the money. A fake ID might be used to collect cash.

Down payments and other wires to a title company are an attractive target for hackers. When buying a home, always verify where the money is supposed to be wired — especially if you get wire instructions by email. Hackers can alter emails (even from people you've been working with for several weeks) and instruct you to send money to the wrong place. To avoid problems, call the recipient to verify the wire instructions).

Again, the main risk is when you send money.

What about receiving a wire transfer – is that safe? For the most part, yes. Payments are more certain because banks only wire money out if the sender has the funds available. Once the money arrives, it should be yours for the taking within one business day (although exceptions may apply). What's more, it is very difficult for the sender to pull money back after it's been transferred.

However, you’ll want to make sure that a real wire transfer was completed (talk with your bank to find out if the funds have “cleared,” or if you need to wait). Some electronic payments can be reversed, and thieves like to take advantage of your confusion – by promising to send a wire transfer but actually sending money using a different (reversible) method, for example.

Other Types of Electronic Transfers

The term wire transfer gets used for various types of electronic transfers. Those transfers are generally not as instant or safe as bank wire transfers, as described above. In fact, almost all payments are electronic these days (even checks get digitized)

Money Transfer services: Western Union money transfers and MoneyGram are sometimes called “wires” and some of those transfers are more or less instant (if you pay with cash and both parties go to a retail location). However, if you fund those transfers from your bank account, the process will take at least several days. If you use your credit card for a wire transfer, you’ll pay extra fees.

ACH transfers: automated clearing house (ACH) transfers are also different. The money moves from bank to bank, but the transfer takes several days, and the payee won’t know for sure if the funds will arrive. What’s more, ACH can only be used for transfers within the United States, while wire transfers can be used globally.

Apps and P2P payment tools: there are several ways to send money without using your bank (directly) or a money transfer service. Venmo, PayPal, Square Cash, and others complete electronic transfers for you, but they probably aren’t considered “wires.” Be sure to check with those service providers on any risks you might be taking (especially if you pay somebody you don’t know). They’re easy and inexpensive, but they all work differently.