How to Do a Free Wire Transfer

By Harry Sit

The most commonly used method to transfer money is by ACH. It’s typically an overnight process, although some banks make it slower than others. There’s technically international ACH, but I haven’t seen it offered to consumers. If you need the money transferred sooner or if you are transferring money to a different country, you can make a wire transfer.

I did a wire transfer recently. It didn’t cost me anything. I’m documenting some info here in case someone hasn’t done it before.

Domestic Wire Transfer

For a wire transfer within the U.S., you need the receiving bank’s routing number and account number. The routing number is also known as the ABA number. ABA stands for American Bankers Association.

Every bank that can receive a wire transfer is assigned a 9-digit routing number. For example Alliant Credit Union’s routing number is 271081528. Some banks have multiple routing numbers. It’s better to double-check the routing number and see it matches the receiving bank. I use this Federal Reserve E-Payments Routing Directory for that.

A domestic wire transfer arrives on the same day it’s sent. It should be available immediately, not subject to any hold.

For Further Credit To

If you are wiring money to an account that’s not a bank account, say a brokerage account, the brokerage firm will give you a bank account they use for all their clients. When the money comes in, they need to know whom the money belongs to. They will tell you to write a “for further credit to” instruction when you do a wire. This is very important. Otherwise the money won’t get credited to the right account.

International Wire Transfer

For a wire transfer to another country, you need the receiving bank’s SWIFT code and account number. If the bank is in Europe, you also need the IBAN number.

A SWIFT code, also known as BIC (Bank Identifier Code), is a set of letters and numbers that identifies a bank. For example the SWIFT code for HSBC London is HSBCGB2L. You can look up and verify the receiving bank’s SWIFT code with this online BIC Search tool from SWIFT.

It’s better if you also get information about the receiving bank’s intermediary bank (also known as the correspondent bank) in the U.S. For example Fidelity requires the intermediary bank information for an international wire transfer. Your bank wires the money to the intermediary bank. The intermediary bank notifies the receiving bank; the receiving bank credits the intended recipient.

international wire transfer

If you don’t know the intermediary bank, your bank will try to find one. Sometimes this makes the wire go through extra hops. As the money travels through intermediary banks, every intermediary bank can deduct a small fee (~$10) from the wired amount. It adds up if the transfer has to go through several hops.

Large banks (Bank of America, Chase, Citibank, HSBC, …) have an advantage here. They more likely have a direct relationship with the receiving bank. Your money will go through fewer hops if you send the wire from a large bank.

Because of the extra steps involved, an international wire transfer can take a day until the money is credited to the receiving account.

Wire Transfer Fees

Wire transfers go through the Federal Reserve system. Federal Reserve charges the banks very little: $0.30 per transfer, with further discounts for higher volume.

Your bank, however, can charge much more than that. For example Alliant Credit Union charges $25 for an outgoing domestic wire transfer, $50 for an outgoing international wire transfer. Thank God incoming wires are free. Some banks charge a fee ($10-20) even for incoming wires.

Free Wire Transfers

You get better deals on wire transfer fees from brokerage firms and mutual fund companies.

Vanguard doesn’t charge a wire transfer fee if the amount of the wire is over $5,000; the fee is only $5 if the amount is between $1,000 and $5,000.

Fidelity doesn’t charge a wire transfer fee if your total household balance at Fidelity is above a certain amount ($15 otherwise).

Schwab gives you three free domestic wire transfers per quarter if your total household balance at Schwab is above a certain amount ($25 otherwise).

Incoming wires are free at Vanguard, Fidelity, and Schwab.

Business checking accounts sometimes get free wire transfers. For example you get 10 free wire transfers every month (5 incoming, 5 outgoing) with HSBC’s free no-minimum-balance Business Direct checking account.

Some premium level personal checking accounts also give free wire transfers. For example if you have Premier Checking at Northwest Federal Credit Union ($50,000 minimum balance or $10 monthly fee), you get free outgoing domestic wire transfers.

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Posted on March 28, 2011 under Banking and Credit Cards. Keywords: .

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Comments

8 Comments on How to Do a Free Wire Transfer

  1. KD on March 28, 2011
     

    International example: http://www.icicibank.com/pfsuser/icicibank/ibank-nri/nrinewversion/money_transfer/money_transfer_usa/e_transfer.htm

    Only to India unfortunately. Its not a true ACH transfer. Their turn around time is 5 days. They are toying with express e-transfer with 3-day turn around time for a fee of $5.

    I have used it in the past. Its hassle-free.

  2. nick on March 28, 2011
     

    > $50,000 minimum balance or $10 monthly fee

    LOL! Giving the bank a free $50k loan, and paying them for the privilege, has got to be the most absurdly expensive way to get out of a wire fee I can imagine.

  3. TFB on March 28, 2011
     

    @nick – I’m not saying one should keep a $50k balance in a zero-interest checking account or pay $10/month just to gain the privilege of free wires. Some people already qualify in other ways: the $50k minimum balance at NWFCU is a combined balance of savings (including CDs) and loan balances. Savings and CDs are not interest free. Loans can be at favorable rates.

  4. Beans on March 28, 2011
     

    Thanks for the post. I wasn’t aware that wire transfer can be free with VG, Fidelity. Good to keep in mind. I had to do few wire transfer recently @ 30 a pop. Ouch!

  5. indexfundfan on March 28, 2011
     

    As far as I know, Vanguard’s wire transfer is only for you to wire money back to your linked bank account. I don’t believe you can request money to be wired to another financial institution or overseas.

  6. TFB on March 28, 2011
     

    @indexfundfan – Vanguard’s Wire Transfer Form for One-Time Redemptions has fields for real estate settlement. That means they can wire to a third party. The form says domestic wires only. I’m not sure if there’s a different form for international wire or they don’t do international wires.

  7. TFB on May 14, 2011
     

    An update: according to this thread on the Bogleheads forum, Vanguard can do international wire transfers. It wants info for an intermediary bank in US.

  8. Miriam on September 20, 2012
     

    A few years ago I used Vanguard’s free international wire transfer services, and you really get what you pay for. It got lost, Vanguard claimed that since the transfer is proprietary information they weren’t authorized to call my overseas bank to try and track it down. That was once. The other times when it went “smoothly” intermediary banks helped themselves to $7 per transfer and it took several business days. Since then I did one or two transfers from my savings account which came through overnight but cost $30 each.

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