What Is an ACH Transfer?

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?

What is an ACH transfer?

ACH transfers are made by the Automated Clearing House — a computer-based network that safely connects banks together to allow money to be sent between institutions.

ACH transfers are processed 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.

ACH transfers can be used for things like receiving direct deposit from your employer, sending money to others, getting government tax refunds or benefits, making bill payments, moving money between your accounts and more.

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.

How much do ACH transfers cost?

ACH debit transfers for automatic bill payments and direct deposits are generally free. But if you want your transfer delivered faster, plan on needing to pay a small expedite fee.

5 steps to do an ACH transfer

Although the specific steps may vary slightly depending on your bank, here’s generally how to conduct an ACH transfer:

1. Log in to your bank account’s website or app and select Transfer or Add money.
2. Select Add an external bank (skip this and the next step if the account is already linked).
3. Enter the external bank’s routing and account numbers, verify if needed, choose checking or savings, and give it a nickname.
4. Select the external account as your funding source and enter the transfer amount.
5. Confirm the transfer.

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.

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.

4 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:

1. Zelle. There are thousands of banks that support Zelle, which allows for instant transfers to US deposit accounts.
2. Venmo. This popular peer-to-peer (P2P) app makes it easy to send cash to friends and family. Cash App supports linking external bank accounts and debit cards. Transfers to others are free, but cashing out your Cash App balance instantly comes with a small fee.
3. Wire transfers. An ol’ reliable option, wire transfers are a way to send money directly to another bank account, internationally or domestically. Domestic wire transfers typically clear within 24 hours, and international wires might take a few business days to clear. While wires are usually faster than standard ACH transfers, they usually come at a fee of around $10 to $45 per sent transfer. Receiving wires is typically free, though.

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.

Frequently asked questions

• What's the difference between an ACH transfer and a wire transfer?

  A wire transfer doesn't use the ACH network, and most domestic wires are completed within a day, but they come with a fee. An ACH transfer isn't instant, often taking around one to five days to clear, but they're almost always free.

  If time is of the essence and you need to send money immediately, a wire transfer may be worth the extra cost. But if you're in no rush, an ACH transfer is a cheaper option in nearly all cases.

• Are ACH transactions covered by Regulation E?

  Yes. ACH transfers are covered by Regulation E — the Federal Reserve's framework that lays out the rights of those who use an entity's electronic fund transfer system or electronic debit cards.

• Can ACH transfers be reversed?

  Sometimes. Based on the National Automated Clearing House Association rules, a bank can only reverse an ACH transfer under these three circumstances:

  1. The wrong dollar amount was transferred.
  2. The money was transferred to the wrong account number.
  3. Duplicate transfers were sent out by mistake.

  If your ACH transfer doesn't meet one of these guidelines, you might still be able to initiate a stop payment request with your bank. But this often comes with associated fees.

• Do ACH transfers go through on holidays and weekends?

  No. ACH transfers are only processed during a bank's business hours, which don't include holidays or weekends

• Can Zelle transfers be reversed?

  In nearly all cases, no, a Zelle transfer can't be cancelled or reversed. Technically, the only way to "reverse" a Zelle transfer is if you send a transfer to someone who doesn't have Zelle or a way to access it. If the receiver doesn't claim the transfer within two weeks, the money is sent back to the sender. But in the case of sending money to someone who does have Zelle, the transfer is near-instant and can't be reversed.

To make sure you get accurate and helpful information, this guide has been edited by Bethany Hickey as part of our fact-checking process.

Written by

Cassidy Horton

Writer

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Cassidy Horton is a freelance personal finance copywriter and past contributing writer for Finder. Her writing and banking expertise have been featured in Forbes Advisor, Money, The Balance, Money Under 30, Insure.com, and other top digital publishers. She holds a BS in public relations and an MBA from Georgia Southern University. See full bio