What is a wire transfer?

Man sitting at an outdoor cafe, reading on his phone about what a wire transfer isImage: Man sitting at an outdoor cafe, reading on his phone about what a wire transfer is

In a Nutshell

If you need to send a large amount of money quickly, a wire transfer might be a good choice for you.
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There are lots of options for sending money to someone these days, but sometimes you’ll need to use a wire transfer.

Wire transfers are handy if you need to send a large amount of cash to someone fast, or to someone who’s abroad. For some transactions, like sending a down payment for a home, a wire transfer may be your only payment option.

But wire transfers may not be right for every need. They tend to be more expensive than other options for sending money. They’re also prone to fraud schemes, so you need to be especially careful when using them.

If you’ve been wondering about wire transfers, continue reading to learn more about when and how to use them and alternative ways to send money.

What is a wire transfer?

A wire transfer is an electronic transfer of money from one bank or financial institution to another. It’s a popular way to send funds, especially if they’re needed quickly. They’re also often used as way to send money overseas.

Still, wire transfers aren’t instantaneous. If you order a wire transfer late in the day, your financial institution may not process it until the following business day.

Since wire transfers generally come with fees and there are other ways to send money that are free, most people only use wire transfers for certain kinds of transactions.

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

While both wire transfers and Automated Clearing House, or ACH, payments are forms of electronic transfer that can be used to pay bills or send money between accounts, they have their differences.

Both types of transfers can be quick and convenient to use, but wire transfers come with higher fees when sending money, and typically have higher limits. ACH transfers tend to be a cheaper option with lower fees (sometimes even free) but there may be a limit on how much you can send.

ACH transfers are more typically used for things like payroll, tax refunds and Social Security payments. Wire transfers are more common when needing to send larger funds, like when buying a house.

What are wire transfer fees and how much do they cost?

Many financial institutions will charge you a wire transfer fee.

The fee may depend on where you’re sending money. Domestic wire transfers (i.e., within the same country) usually cost $20 to $30. If you’re sending money internationally, the fee can be as much as $50.

Depending on your financial institution, you may also pay to receive a wire transfer —  usually $5 to $15.

Are wire transfers safe?

Yes and no. Since wire transfers are used to move large amounts of money quickly, they’re becoming increasingly popular in common scams.

One scam relies on a bait-and-switch technique. Hackers monitor the email accounts of people involved in real estate transactions, and when it comes time to close on a house, they send out a lookalike email to the would-be homeowners with instructions to wire funds to a scam account. Other scams involve foreign wire transfers.

Wire transfers are generally safe, but it can still be helpful to take some precautions before sending one.

  • Call the person you’re sending money to and verify their account details right before you do the transfer.
  • Watch out for grammatical errors and typos in the message as well as the sender’s email address.
  • Be particularly wary of time-sensitive pressures, such as threats to arrest you if you don’t wire money right that instant.
  • Ask the recipient to confirm receipt of your money as soon as they get it.

Once you send money by wire transfer, there’s often no way to get it back unless you ask your bank to reverse the charge. But most scammers expect this and will move money to another account as soon as they receive it, preventing you from getting it back. So it’s important to be cautious before you start a wire transfer.

What are alternatives to wire transfers?

While wire transfers are suitable for some transactions, there are other ways to send money that may be better suited for everyday use.

  • Apps like Venmo and Paypal: These apps are great ways to send money digitally for free within the U.S., but there may be limits on how much you can send and not everyone uses them.
  • Digital wallets like Apple Pay and Google Pay: These are handy ways to sort out the payment options you already have, but not so much for sending large amounts of money to someone.
  • Cash: Cash works well for most payments, although federal regulators warn that sending cash by mail can be risky and prone to scammers.
  • Check: Checks can be a great way to send money, although not all merchants  accept them.
  • Money orders: Money orders are sometimes used for mail-in payments where safety is a concern, but they can come with a fee.
  • Debit cards, gift cards and prepaid cards: Cards are a convenient way to pay for goods and services. But be aware of potential scams.

What’s next?

You may not need a wire transfer very often, but when you do, it can be a safe, speedy way to send money if you know who’s receiving it and what to watch out for. But there are other options to choose from, especially online.

About the author: Lindsay VanSomeren is a freelance writer living in Kirkland, Washington. She has been a professional dogsled racer, a wildlife researcher, and a participant in the National Spelling Bee. She writes for websites such a… Read more.