ACH Transfers: What Are They and How Do They Work?

November 23, 2022

What Is an ACH Bank Transfer?

ACH transfers are bank-to-bank electronic transfers processed through the Automated Clearing House (ACH) Network. ACH transfers allow you to move money between different banks securely. Many people have probably used ACH transfers without realizing it. One of the most common examples is paying bills online through your bank account or receiving online payments from customers.

ACH transfers are more cost-effective and user-friendly than writing checks or paying with credit or debit cards.

What are the different types of ACH transactions?

ACH transfers make life easier for both the sender and recipient, letting you send and receive money conveniently and securely without leaving your home. The ACH Network processes two kinds of ACH transactions: Direct deposits and direct payments.

ACH Direct Deposit is an electronic transfer from a business or government entity to a customer. Such payments include deposits of tax refunds, government benefits, paychecks, annuity payments, interest payments, etc.

Individuals and businesses can use ACH Direct Payments to send money while paying bills online or sending money to family and friends.

What Is the Difference Between a Wire Transfer and an ACH?

An ACH transfer is completed through a cleaning house and can be used to process direct payments and deposits. Wire transfers allow the movement of funds from one bank account to another.

Do ACH Payments Cost Consumers Money?

In most cases, ACH transfers (including bill payments and direct deposits of paychecks) are free.

Are There Any Downsides to ACH Transfers?

ACH transfers are convenient, but they also have some potential drawbacks that you should keep in mind when using them to move money from one bank to another, send payments, or pay bills.

Banks can impose limits on how much money you can send via an ACH transfer.

You could be hit with an excess withdrawal penalty if you go over that limit with multiple ACH transfers from savings to another bank.

When you choose to send an ACH transfer, there may be a cutoff time by which you need to get your transfer in to have it processed for the next business day.

For expert advice and world-class customer service, contact us by phone from 9 a.m. to 4 p.m. Central Time at 1-888-312-1203, Monday throughout Friday.

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