Saturday, October 15, 2016

Two Completely Different Ways To Transfer Money

Sometimes you need to move money quickly and securely. If so, you might use a bank wire to get the job done. The process is fairly easy, but it can be cumbersome to provide instructions in a format that your bank requires.

If you're not sure exactly how wire transfers work, be sure to read Bank Wire Transfer Basics before you authorize a transfer out of your account. The money you send will leave more or less immediately, and you won't be able to get it back (nor can you "stop payment" or cancel the transfer).

If you're not sure who's really getting the money, this can be risky.
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Wire Transfer Instructions
If you already know the basics, you’re ready to start the bank wire process. You’ll need the following information for the account that will receive the funds.

Recipient bank name (the bank that the money is going to)
Recipient bank ABA number or other code
Payee’s account number at the bank
Any additional information you should provide (further delivery instructions, etc)
To get this information, just ask the recipient (assuming you're sending money to somebody else). They can probably provide an instruction sheet with all of the necessary details spelled out for you.

If you're receiving money, ask your bank for wire transfer instructions. Note that the ABA number you're used to using (or the one you see on your checks) might not be the best one to use for wire transfers. If you need the money quickly, it's always best to talk with customer service and verify that you're using the correct set of numbers and instructions.

Sending a Wire? Contact Your Bank

To send a wire, gather the information above, contact your bank, and ask how to send a wire transfer from your account. They may have a form that you need to fill out, or you might be able to start the process online.

Banks increasingly accept wire instructions online, but make sure to verify all of the details with your bank before you decide to proceed online: you might be able to send small wires online, while a visit to the branch is required for large dollar amounts (to purchase a home, for example).

Depending on when you submit instructions to your bank, they may complete your bank wire on that same day. Contact your bank after you submit your request to confirm that they have everything they need.

Unlike some electronic payments (such as ACH payments) bank wires cost money. You should expect to pay a fee for the service, and you might even have to pay if you receive a bank wire into your account. Wire transfer fees are often between $25 and $40.

Waiting for Credit

Although bank wires are fast, they don’t always show up in the recipient’s account immediately. The receiving bank often has a queue of incoming bank wires, and it can take time for them to move through them all and credit the ultimate payee. This can be frustrating for large and important transfers, but it is normal. Sometimes a few phone calls will get you in touch with an individual who can at least see that the transfer was completed, but sometimes it's just a matter of waiting.

Alternative ways to Move Money

Sometimes a wire transfer is your only option.

But there are other ways to send or receive funds - even 'cleared' funds (that don't take multiple business days to settle, and are acceptable for transactions like purchasing a home).

Cashier's checks: if you need cleared funds, the next best option is a cashier's check. Cashier's checks are paid out of the bank's account (because the bank or credit union takes the money out of your account when the check is printed), so they are considered just as good as bank wires. Cashier's checks typically cost less than wire transfers. For more details, read How Cashier's Checks Work.

Money orders: money orders are similar to cashier's checks, but not quite as safe. They can be bought at banks, credit unions, convenience stores, post offices, and elsewhere. They are also relatively inexpensive, but they are not suitable for large purchases. For more details, read How Money Orders Work.
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Other options: for more informal transfers, there are numerous ways to send money - often for free. Online services and apps make the process easy, but it generally takes a few days and requires some trust from both parties involved.  For more details, read about the Cheapest Ways to Send Money.

Friday, October 14, 2016

Why Use A Wire To Transfer Money

When you need to send money fast, a wire transfer is often your best choice. Bank 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 purchase of a home -- wire transfers are your only option. Why? It's all explained below, but 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. Almost all payments are electronic these days (even checks get digitized), but the term usually refers to a specific type of payment: a relatively fast and secure transfer from one bank or credit union to another using a network such as SWIFT or Fedwire. If a payment takes several days to clear, it’s not a traditional wire transfer.

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How safe are wire transfers? Funds go from one bank to another, and then to the recipient’s account. Inside of the United States at least, 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 virtually impossible 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. 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.

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.

Speed of Wire Transfers

Wire transfers are fast. Because of the certainty mentioned above, transferred funds are considered ‘cleared’ immediately when received.

In most cases there is no hold on the funds, so the recipient can use that money within one business day. Sometimes it takes a while for the receiving bank to show the wire proceeds in the recipient’s account, but the money is there – 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.

Reliability

The bank wire transfer system is reliable. It has to be robust because it is used for so many important (and large) transactions. As a result, there are redundancies built in to reduce the impact of failures or disasters.

How to do a Bank 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. Plan on paying a modest fee ($40 or so is common).

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). Some banks charge a modest fee to receive wires, but some don’t.

Other Types of Electronic Transfers

The term wire transfer sometimes gets used for other types of electronic transfers. Those transfers are generally not as instant or safe as the transfers described above. For example, Western Union money transfers 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 Western Union office). However, if you fund a Western Union transfer from your bank account, the process will take at least several days.

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.