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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.
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:
Common types of ACH transfers | Is it a debit or credit transaction? |
---|---|
Direct deposit | Debit |
Automatic bill pay | Debit |
Recurring deposit into an investment account | Debit |
External transfer from one bank account to another | Credit |
Sending money to family and friends | Credit |
Paying a bill manually | Credit |
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.
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.
Bank | ACH transfer fee | Processing time |
---|---|---|
Chase | None | 1 to 2 business days |
Bank of America |
| 3 business days |
Wells Fargo | None | 2 to 3 business days |
Citi | None | 1 to 3 business days |
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:
If you’re looking to bypass the time and potential costs required for ACH transfers, here are some alternatives you could use:
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.
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