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 Fedwire Participant Search 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
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.
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: $0.70 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.