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What is an ACH transfer?

A reliable way to transfer money electronically. But how does it work?

Updated

An ACH transfer is a way to electronically move money from one bank account to another. It’s often easier than mailing a check or handling cash.

But what is it exactly? Here’s a cheat sheet on ACH transfers—what they are, how they work and what you can expect when you make one.

What is an ACH transfer?

ACH transfers are made by the Automated Clearing House — a system that processes ACH transfers in batches on a first-come, first-served basis. Unlike wire transfers that are processed in real time, ACH transfers are usually processed in batches three times daily.

There are two major types of ACH transfers:

  • ACH debit transactions. This type of transaction most commonly happens when you set up recurring payments with bill collectors and they’re able to pull money from your account on a regular basis. It’s passive because you don’t have to send the money yourself — instead, you give businesses permission to do it for you.
  • ACH credit transactions. This type of transaction allows you to send money to friends, family, other bank accounts and bill collectors. Instead of letting businesses “pull” money from your accounts as needed, you “push” money to other people on an as-needed basis.
Common types of ACH transfersIs it a debit or credit transaction?
Direct depositDebit
Automatic bill pay Debit
Recurring deposit into an investment accountDebit
External transfer from one bank account to anotherCredit
Sending money to family and friendsCredit
Paying a bill manuallyCredit

How long does an ACH transfer take?

Based on rules set by the National Automated Clearing House Association, banks have until the next business day to clear ACH debit transactions and one to two business days to clear ACH credit transactions.

Each bank decides how soon they want to process transactions within those limits. For example, some banks may process same-day payments while others hold your funds for a set time.

How much do ACH transfers cost?

ACH debit transfers for automatic bill payments and direct deposits are generally free. But you may pay a small fee if you need to expedite a payment.

ACH credit transfer fees vary from bank to bank. You may pay a small fee to send an ACH credit transfer, but you usually won’t pay anything to receive one.

Here’s a breakdown of how much ACH transfers cost at the four largest financial institutions in the US.

BankACH transfer feeProcessing time
ChaseNone1 to 2 business days
Bank of America
  • None for incoming
  • $3 for outgoing
  • $10 for expedited outgoing
3 business days
Wells FargoNone2 to 3 business days
CitiNone1 to 3 business days

Limitations to ACH transfers

ACH transfers help you get paid faster, pay your bills on time and conveniently move money between external bank accounts. But there are a few things you should watch out for:

  • Transaction limits. There may be a cap on how much money you can send or receive daily, weekly or monthly. Some banks may impose a limit on how much you can transfer at one time.
  • Location. Your bank may not let you initiate ACH transfers to financial institutions outside of the US.
  • Business hours. Banks process ACH transfers at different times during the day — and none of them process payments outside of business hours. Missing the deadline could delay your payment and result in late fees.

ACH transfer alternatives

If you’re looking to bypass the time and potential costs required for ACH transfers, here are some alternatives you could use:

  • Zelle. If your bank supports person-to-person payments, there’s a good chance it uses Zelle. This platform allows you to send money to family and friends for free using your bank’s mobile app. In most cases, the transfer is instantaneous.
  • Venmo. This mobile app makes it easy to electronically send money to friends and family. You can send money from your linked bank account or debit card. Or, send funds directly from your Venmo account balance. But you’ll pay a small fee if you use a credit card.
  • PayPal. This site lets you send money to merchants and individuals alike. It’s free to send personal payments from a linked checking account. But expect to pay a fee if you need to use a debit or credit card or you’re sending an international payment.

Need a bank account to transfer money?

Name Product Minimum deposit to open ATMs Out-of-network ATM fee
HSBC Premier Checking
$1
Free to use at all ATMs in the US
$0
Get up to $700 (max. $120 per month) for eligible new customers who open an HSBC Premier checking account. Conditions apply. Deposit products are offered in the US by HSBC Bank USA, N.A. Member FDIC.
Chase Total Checking
$0
Access to 16,000 ATMs and nearly 4,900 branches nationwide
$2.50
Get a $200 bonus when you open a new Chase Total Checking account and set up direct deposit within 60 days of opening your account. Chase's simplest checking account is easy to use and gives you access to 16,000 ATMs and nearly 4,900 branches. Available online nationwide except in Alaska, Hawaii and Puerto Rico.
Chase Premier Plus Checking
$0
Access to 16,000 ATMs and nearly 4,900 branches nationwide
$2.50
Get a $300 signup bonus as a new Chase checking customer when you open a Chase Premier Plus Checking account and set up direct deposit. Available online nationwide except in Alaska, Hawaii and Puerto Rico.
TD Beyond Checking
$0
1,900 ATMs across the country and Canada
$0
A checking account that offers interest plus three ways to waive the monthly fee, two overdraft paybacks a year and no ATM fees with a $2,500 balance.
N26
N26
$0
Fee-free ATM withdrawals at Allpoint ATMs
$0
A digital bank account with no hidden fees, no minimum account balance and no maintenance charges.
BBVA Online Checking
$25
No ATM fees nationwide at more than 64,000 AllPoint, participating 7-Eleven and BBVA USA ATMs
$3
A full-service account with convenient, surcharge-free access to two massive ATM networks
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$
$
months
Name Product Interest rates (APY) Fee Minimum deposit to open Interest earned More info
American Express® Personal Savings High Yield Savings
1.00%
$0
$0
Go to site
View details
Enjoy no monthly fees and a competitive APY with this online-only savings account. Accounts offered by American Express National Bank, Member FDIC.
CIT Bank Savings Builder High Yield Savings Account

0.95% on balances of $25,000+ or set up a direct deposit of $100+ each month
0.79% on balances of $0 to $24,999
$0
$100
Go to site
View details
No account opening or maintenance fees. Daily compounding interest. Earn one of the nation's top rates
Discover Online Savings Account
1.01%
$0
$0
Go to site
View details
Take advantage of a high-interest online savings account with no fees, no minimums and more.
Aspiration Spend & Save Account

1.00% on balances of $0 to $10,000 but you’ll need to be enrolled in Aspiration Plus and make at least $1,000 in debit card purchases a month
$0
$10
Go to site
View details
A spend and save combo account with no monthly service fees, free access to every ATM in the world, unlimited cash back rewards and deposits insured by the FDIC. The Aspiration Spend & Save Account is a cash management account offering of Aspiration Financial, LLC, an SEC-registered broker-dealer. Aspiration is not a chartered bank.
BBVA Money Market

0.19% on balances of $1,000,000+
0.10% on balances of $100,000 to $999,999
0.05% on balances of $0 to $99,999
$15 per month
(can be waived)
$25
Go to site
View details
Earn a promotional APY for your first 3 months and access your money by ATM, check or bill pay.
Radius Bank High-Yield Savings

1.15% on balances of $25,000+
0.75% on balances of $2,500 to $24,999.99
0.05% on balances of $10 to $2,499.99
$0
$100
Go to site
View details
A free high-interest savings account with a $100 minimum deposit to open
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Bottom line

ACH transfers are a convenient and cost-effective way to electronically transfer money to another financial institution. They’re often free, but you may pay a small fee to send ACH credit transfers depending on your bank.

Thinking an ACH transfer may not be for you? Explore other ways to send money to a bank account.

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