Many people make plenty of money transfers over the years without really worrying too much about understanding the difference between an ACH and a wire transfer. For most people, if their money makes it to where they need it to go, that’s all that matters. But when you encounter banking terminology it’s worth actually understanding how it all works and what it means, because it can save you time, money, and unnecessary effort.
Remitly is dedicated to helping you break down everything from finances and money transfers to visas and moving abroad. We want our readers to be informed, especially when it comes to those everyday tasks that seem mundane but are actually really important. So here’s our guide to ACH transfers.
What is an ACH transfer?
You’ve probably made an ACH transfer recently without realizing it. They’re so common in our banking and daily lives that we hardly pay attention to those three little letters.
The Automated Clearing House network is an electronic bank transfer that moves money between accounts—we know it simply as ACH. Think of this network as a secure digital highway where banks send money and receive payment requests.
Let’s break it down even further.
Two-way ACH transfers
- ACH credit—You send money out, such as when an employer directly deposits your paycheck into your account or you move money between your own accounts.
- ACH debit—Someone pulls money from your account with your permission, like automated monthly subscriptions or gym membership fees.
Everyday examples you already know
If you’ve ever received a tax refund directly to your bank account, paid your Netflix bill automatically, or cashed out from a transfer service like Remitly to your bank using the standard option, you’ve already experienced ACH in action.
How do ACH transfers work?
Transfers often seem to happen with no obvious intervention from you at all. One moment the money is in your account, then it’s gone. Or vice-versa, for those happier times when it’s you receiving the money. Here’s how it works:
Step-by-step process
- Initiation—A payment request is made, such as payroll or a bill payment.
- Originating Bank—Your bank gathers and formats the request.
- ACH operator—The Federal Reserve or The Clearing House (the Electronic Payments Network) sorts and routes the transactions to their destinations.
- Receiving bank—Funds are credited to or debited from the account at the other end of the process.
Why an ACH transfer isn’t instant
ACH runs on batch processing, which means transactions are grouped together and sent at set times. If you’ve ever wondered why choosing an ACH transfer over a wire is cheaper, this is why. Batch processing keeps costs low, but it also means most transfers take one to three business days to arrive. Another reason ACH transfers are a bit slower is because security is built into every stage.
Types of ACH transfers you already use
Many of us don’t bother to check our bank accounts daily, sometimes not even weekly. Direct deposits land in your account the same day every month, bills are automated, and subscriptions renew without you lifting a finger.
What used to be a constant chore of writing checks and mailing payments that forced us to balance our checkbooks now happens quietly in the background, thanks to automated banking processes like ACH transfers.
In this digital age, however, it’s worth considering going over your accounts daily or at least once a week to ensure everything is in order. This allows you to spot an ACH transfer that is out of place.
Be vigilant
While ACH is one of the safest ways to transfer money and is used by everyone from private citizens to the US government, it never hurts to keep an eye on your account activity.
Scammers might try to slip in small purchases among your subscriptions, hiding them in plain sight (we’ll touch more on security later). Checking your statements and accounts regularly lets you catch these discrepancies and get your money back.
Now that we understand the basics of ACH, let’s take a look at the different types of transfers so you can keep your money in order.
Direct deposits: paychecks, benefits, and refunds
Employers often rely on ACH to pay wages, the IRS uses it for refunds, and government programs distribute benefits this way. It may not be the fastest transfer, but it does speed up access rather than waiting for a check in the mail—the bonus part is that it saves a lot of paper as well.
Advantages include:
- Consistent and predictable timing.
- No lost or stolen checks.
- Earlier access to funds at certain banks.
- Automated bill payments: no more missed due dates
Before so many banking processes were automated, people often faced exorbitant late fees if they lost track of a due date. The bills would come in, get buried under other papers, and the next thing you know, you’re receiving late notices because you sent your check out a day too late.
Today, you can automate almost every payment to prevent late fees, from utilities to mortgages, credit cards, and subscriptions.
Moving money between friends
It used to be that you’d pay your friend later for the movie ticket or drink they bought you, but now you can transfer the money back to them using apps like Remitly or digital payment apps.
The free transfer options might sometimes take a few days, but it’s still much faster than your friend waiting until they see you again next time.
When will my money arrive? ACH transfer speeds
One of the biggest questions people have when setting up a transfer is, “When will my money arrive?” If you’re making a payment and are short on time, you might not have three business days for the money to transfer. ACH transfers don’t process on weekends and holidays, which halts the transfer until the next business day—this means you’re losing days over the weekend.
If you’re in a rush to pay a bill or send money to a loved one in need, consider the day you’re sending. ACH transfers don’t always take three days to arrive, but they can. Sending on a Friday may not be the best idea if it’s urgent.
The good thing is you can probably, depending on your bank, opt for a same-day transfer. But it’ll cost you.
Standard vs. Same-day ACH
- Standard—One to three business days at most banks and institutions.
- Same-day—This option is available at most banks for a fee.
Chase Bank, for example, charges 1% of the payment amount and up to $25 USD for each same-day transaction, with a 2 p.m. cut-off time.
ACH transfer costs and fees vs. other payment methods
The advantage of ACH is its low cost. In most cases, they’re completely free for personal banking customers. When fees do apply, ACH is almost always the cheapest option compared to wires or cashier’s checks.
For example, Chase charges business customers $2.50 USD for the first ten transfers each month, and only $0.15 USD after that.
Personal account holders at major banks like Chase, Citi, and Bank of America typically pay nothing for standard domestic transfers or moving money between accounts, such as checking and savings.
Since ACH transfers are slower and have a limit on amounts, many people opt to send wire transfers when they’re in a major hurry or have to move large amounts.
How to choose if ACH is the best method for transfer
|
Method |
Typical Cost |
Speed |
When it makes sense |
|
ACH Transfer |
Many banks, like Chase, don’t charge for sending an ACH domestic transfer |
1-3 business days (same day possible for a fee) |
Everyday payments, direct deposit, moving money between accounts |
|
Wire Transfer |
$0 to $50 USD, depending on your bank or provider |
Same day (domestic), 1-2 days (international) |
Urgent or large transfers when speed matters more than cost |
|
Credit/Debit |
Merchants typically pay 1.5-3% in processing fees; credit card APRs vary, but will add cost to your overall statements if bills aren’t paid in full |
Instant |
Larger purchases (depending on card limit), everyday purchases, and emergencies |
|
Checks |
Cost of checks and postage |
Several days, depending on where the check is going (sorting + delivery) |
Traditional option if you’re unable to send electronically |
|
Providers like Remitly offer fees as low as $0 USD on your first transfer and overall offer lower fees and better exchange rates than larger banks |
Minutes to a few days |
Sending money abroad is often cheaper and faster than a wire transfer—especially for larger amounts |
How to set up an ACH transfer
Setting up a transfer is simple—as long as you pay attention to the details.
What you’ll need from your recipient
- Account number.
- Routing number.
- SWIFT/BIC codes if sending money internationally.
- Recipient’s address and full name, depending on the bank or provider.
Common mistakes to avoid
- Mixing up routing and account numbers.
- Forgetting to verify SWIFT/BIC codes.
- Scheduling transfers too close to weekends or holidays.
Security and safety of ACH transfers
ACH transfers aren’t completely without risk, but since they’re used by some of the largest financial institutions, strong security measures and safety nets are in place for protection.
Built-in protections
- The National Automated Clearing House Association (NACHA) enforces strict compliance for all ACH transfers, updating rules and regulations frequently on its website.
- Bank monitoring tracks for unusual activity, with many banks blocking purchases they consider suspicious until you confirm your identity.
- Federal law ensures error resolution, meaning mistakes get fixed so you don’t lose money.
Practical safety tips for you
- Only authorize debits from trusted businesses.
- Check bank statements regularly to ensure there are no unusual transfers you haven’t approved.
- Set up transaction alerts; many bank apps offer notifications for each purchase, so you can quickly address any unauthorized transactions.
If something does go wrong, like an unauthorized debit from your account, you have the right to dispute it by calling your bank and asking for more information. Banks are legally required to investigate and refund your money if you weren’t at fault.
Don’t be afraid to reach out and use these protections for yourself—they’re there for you!
Take charge of your money with smarter transfers
ACH transfers are the backbone of modern banking—quietly supporting paychecks, bills, and personal transfers with reliability and security. They might not always be the fastest option, but they get the job done in the most cost-effective way.
Want to learn more? Check out our resources on transfers and finances, and confidently take charge of your money today.
Frequently Asked Questions (FAQs)
Are ACH transfers safe?
ACH transfers are among the safest ways of transferring money. Encrypted, monitored, and under federal consumer protections, ACH transfers are used for direct deposits by employers, the IRS, and government programs.
How long do ACH transfers take?
ACH transfers typically take one to three business days, but some providers and banks offer same-day options.
Do ACH transfers work on weekends?
ACH transfers usually don’t process on weekends or holidays. Most banks also have daily cut-off times, so if speed is important, plan your transfer accordingly.
Can I cancel an ACH transfer?
If the transfer hasn’t been processed, you can cancel it. However, once it’s complete, you’ll need to either transfer the money back or contact support.
Are there limits on ACH transfer amounts?
Yes. Most banks and providers have daily and monthly caps, but they vary. If you want to transfer a larger amount of money, it’s best to check with the service you’re using.