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EFT Payments vs. Bank Wires


Cash may be king, but most transactions are done electronically now. Even gifts, once done by cash or check, are being taken over by electronic transfers. There are multiple types of electronic transfers that may change how quickly you send or receive money. The most popular terms and types of electronic transfers are electronic funds transfers (EFTs) and bank wire transfers. Let’s cover EFT and bank wires, what each is and where they’re most useful. If you’re looking for help on managing your finances and transferring money, consider working with a financial advisor.

What Is an EFT?

An EFT, or electronic funds transfer, is any electronic transfer of funds from one bank account to another. It’s a term that covers not just online transfers, but those done over the phone and ATM transactions.

You likely use EFTs every day, whether it’s through a debit payment, a paycheck deposit or sending money through an app like Venmo. They come in a variety of forms, with different processing times, uses and limits. Where an automated clearing house (ACH) payment may take a few days to process, an ATM withdrawal can happen instantaneously.

What Is a Wire Transfer?

A bank wire, aka a wire transfer, is a type of EFT that involves a quick transfer of funds from one bank to another. Bank wires are processed over a secure network, like SWIFT or Fedwire. These transactions can be processed in as little as a day domestically but can take longer internationally.

To complete the transfer, you supply your bank or credit union with the necessary information. This includes the recipient’s name, address, their bank’s name and address, account number and routing number. If you’re transferring the money internationally, you will need additional information, such as the SWIFT code of the receiving bank. Domestic transfers typically cost $10 – $30, whereas international transfers can cost $75 or more.

Unlike a direct exchange from account to account, wire transfers act more like a debit. There are several verification steps, especially for international transfers. This can make them more secure than other ways of payment.

However, bank wires happen quickly, and once that transfer is done, that money is gone. This makes them more susceptible to scams than transactions that take longer to process. Where suspicious debit and credit transactions can be flagged and declined before they complete, with wire transfers, it’s a race against the clock.

EFT vs. Bank Wires: What’s the Difference?

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All parmesan is cheese, but not all cheese is parmesan. It’s the same when considering EFTs or bank wires. All bank wires are EFTs. But what’s the difference between a bank wire and other types of EFTs? Each type of EFT has its own use. A bank wire is usually used for a few reasons:

  • You need to move money quickly: A wire transfer can be processed the same day domestically and usually within a few days internationally.
  • You want to send money internationally: Many other types of EFTs only work domestically. Bank wires can be used to send friends and family funds across borders.
  • You want to transfer a large sum of money: Other EFTs have much lower limits on the amount of money you can move. This makes wire transfers common in instances where a lot of money is involved, such as paying your down payment and closing costs on a house.

Now that you know where a bank wire makes sense, let’s compare it to another common EFT: the ACH transfer.

Bank Wires vs. ACH Transfers

When compared to the ACH transfer, bank wires are faster, can be done internationally and you generally can transfer more money with them. Because they’re processed in batches, ACH transfers can take a few days to go through.

How much you can transfer with an ACH will depend on your bank. Some set daily and/or monthly limits. So you may not be able to transfer more than a few thousand dollars in a month depending on your bank.

However, ACH payments can be reversed easier and are free. If it’s a smaller, domestic payment that can wait a few days, an ACH transfer makes more sense. Otherwise, if you need to send money fast, especially if it’s a large amount or you’re sending it internationally, it may be worth it to pay the extra charge for a bank wire.

The Bottom Line

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There are several types of ways to transfer funds electronically. ETFs, let people purchase with debit/credit cards, withdraw from their ATM and send funds via bank wire. Each of these transactions has its time and place. Bank wires are good options when you need to send money quickly, internationally and/or send a large sum.

Tips for Financial Wellness

  • A financial advisor can be a strong asset if you need help managing your financing, including advice on the best way to transfer funds. If you’ve never worked with one, it doesn’t have to be difficult to find the right one. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • A lot goes into picking the right financial institution. You want to commit to a place that can help you reach your financial goals. To help you out, we created a full report on the best banks in the United States.

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