When it’s time to send money from one party to another, it’s time to start researching wire transfers. Moving money can be a delicate and critical process for individuals and businesses alike, so it is important to understand how to best deliver important funds to meet everyone’s needs. Wire transfers are a very common and reliable option for transferring money electronically, so here’s everything you need to know.
What is a wire transfer?
A wire transfer is an electronic transfer of funds from one bank or institution to another using a secure network.
A bank, credit union, or other financial institution such as Western Union can submit detailed information of accounts and funds to the receiving institution. Originally named for the telegraph wires used to transmit fund exchange information, wire transfers are now submitted electronically via online networks like SWIFT or Fedwire.
Wire transfers are particularly useful for large sums, international transfers, or speed exchanges.
How much does a wire transfer cost?
One drawback of a wire transfer: it will cost you. Due to the immediacy and manual nature of how a wire transfer is sent, there are fees associated with sending a wire transfer, and sometimes receiving a wire transfer as well. How much it will cost you will depend on many factors, such as your bank’s policy, where the transfer is being received, urgency, size of transfer, and if it’s a credit or cash transfer.
Average wire transfer costs
|Domestic outgoing wire transfer||$27 average|
|Domestic incoming wire transfer||$15 average|
|International outgoing wire transfer||$45 average|
|International incoming wire transfer||$15 average|
Wire transfer costs at popular banks
|Institution||Incoming Domestic||Outgoing Domestic||Incoming International||Outgoing International|
|Bank of America||$15||$30||$16||$45|
|Chase||$15||$25||$15||$5 foreign currency; $40 USD|
|Fidelity||Free||Free||Free||3% foreign currency; Free if USD|
Outgoing wire transfers
Wire transfers are initiated by the outgoing, or sending, party. Individuals wishing to send funds via wire transfer need to collect the relevant account information and submit a carefully detailed request through their bank or financial institution. Some banks may offer free wire domestic wire transfers under a certain limit, while others may tailor the wire transfer fees to the size of the transfer (i.e. a percentage of the total sum).
Incoming wire transfers
For most banks and credit unions, there is no charge to receive wire transfer funds in your account. They will be “clear” as soon as the wire transfer processes and completely at your liberty to access and spend. Some financial institutions may charge a nominal fee to accept a wire transfer, but those fees will usually be between $5-15.
International wire transfer fees
International wire transfers can be slightly more complicated, as they often involve currency exchanges and the involvement of multiple governmental agencies. Funds leaving or entering the United States are monitored by the IRS and the Office of Foreign Assets to ensure legality and for counterterrorism purposes.
International wire transfers can take more time and cost nearly double in wire transfer fees, but may be the only option for moving money electronically across borders. You can expect an international wire transfer to cost around $45, but the amount may be contingent on a percentage of the total being transferred or the destination country.
How to avoid wire transfer fees
If you want to avoid or minimize wire transfer fees there are a few things you can do:
- Do it yourself: Many banks offer online wire transfers that you initiate yourself for a smaller or no fee, versus a $10+ fee for having a banker complete the transaction for you.
- Shop around: If your bank doesn’t offer free wire transfers, you may find places that can complete them for mere dollars. For example, Walmart uses Moneygram to send wire transfers for just $4 apiece.
- Upgrade: Some banks and financial institutions offer free or discounted wire transfers as part of a premium account. For example, Citibank offers free wire transfer for their Citi Private and Preferred accounts.
- Exchange currency first: In some cases you may save money by changing your currency BEFORE sending the wire transfer, instead of as part of the process. It will depend on the currency, destination, and current exchange rates.
- Avoid credit transfers: You can fund a wire transfer through a credit card, but this incurs both fees and interest that can make it much more expensive. If at all possible, fund your wire transfers with liquid cash instead of credit.
- Ask about recurring payments: If you’re going to be regularly sending funds, say for a mortgage payment or to a vendor, talk to your bank about the most cost-effective methods. They may be able to reduce fees for an automatic recurring wire transfer, or they may advise that you use ACH (automated clearinghouse) transfers instead.
Are wire transfers safe?
Wire transfers are considered safe — as long as you verify the receiving party.
Tales of wire transfer fraud are widespread and certainly affect some consumers. The only real danger of a wire transfer is that it is essentially irreversible once sent. Wire transfers deliver almost instantaneously and they will reliably arrive in the account you specified. This can be a problem if you provided the wrong information or if you were deceived by the receiving party.
For business and critical transactions, wire transfers are incredibly safe and effective. They can only be completed by the initiating party, so a wire transfer will never take money from your account or compromise your information without your action.
How to do a wire transfer
A wire transfer can be completed in just a few steps, though they are detailed. Once you have made the decision to utilize a wire transfer take the time to carefully complete the following steps:
- Gather your information: How much money is being sent? Where is it being sent? You will need institution account numbers for the sending and receiving accounts, identity verification (such as a driver’s license), detailed contact information, totals, and dates for submission.
- Work with your bank or institution: Once you’ve chosen an institution to handle your wire transfer, call them or go into their establishment to verify information and communicate fees and details.
- Submit the wire transfer: You will likely fill out a paper or online form and cover the wire transfer fee, if applicable. Once submitted, the bank or institution will give you a receipt and confirmation that the transfer has been completed.
The steps may vary depending on the institution, and international wire transfers will include steps regarding currency and clearances in the destination country.
Be sure to verify all data and read the fine print of any wire transfer.
Alternatives to wire transfer
Wire transfers are not your only option for electronically moving money from one account to another. This age of technology offers a wide range of tools for managing and transferring funds to meet your exact needs.
ACH transfers use a different set of networks to transfer funds, and those networks process transfers in batches on business days. ACH transfers take a little longer than a wire transfer, and usually have limits on the amount of money you can transfer, but they are usually very convenient and free.
Banks can also offer wire transfer alternatives, such as depositing cash into the individual’s account at a branch of the bank they use, creating a bank draft, or drawing up a money order. Various methods can be conducted through the mail (money orders, checks, cash mail) but are obviously less secure and very unpredictable.
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