This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
Moving money within accounts at one financial institution is easy enough. You can visit your bank in person, give them a call or use your bank’s website or app to move funds from one account to another.
But what if you have accounts at separate banks, fintechs or credit unions? What if you have retirement accounts to fund? What if you need to send money to someone else, whether at the same bank or a different institution?
Transferring money from one bank to another can be a little more complicated, but the good news is, you have options. One is likely to make sense for your situation.
This article breaks down how to transfer money from one bank to another into two categories: transferring your money into one of your own bank accounts and transferring your money to someone else.
How to Transfer Money Between Your Own Bank Accounts
Many people have separate bank accounts for various purposes. For instance, entrepreneurs keep their personal finances separate from their business finances and might have incentives to keep the accounts with different banks and credit unions.
Other savvy savers may bank online for their savings because they want a higher APY but have a checking account with a local bank for ease of access. Investors can easily rack up various accounts for savings, checking, money market, stocks and IRAs.
Whatever your reason for managing separate accounts with separate banks, you have a few methods for money transfers between those accounts.
Setting Up Automated Clearing House (ACH) Transfers
The safest, most reliable, and thus most common form of bank-to-bank transfers is through ACH transfers. ACH was established in the 1970s as a cheaper, more efficient alternative to paper checks and wire transfers.
Since then, most employers have adopted ACH transfers as their payment mechanism; more than 93% of Americans now receive their paycheck via direct deposit.
ACH and electronic funds transfer (EFT) are often used interchangeably. However, ACH is a type of EFT. EFT is a broader term that includes other transfer methods, like digital payments and wire transfers.
To complete a bank-to-bank transfer using ACH, you’ll first need to link your two accounts via your online banking platform. For the sake of example, let’s name your two financial institutions Penny Credit Union and Hoarder Bank.
For this example, we’ll assume you want to transfer $5,000 from your Penny Credit Union checking account to your Hoarder Bank savings account:
Step 1: Find the Correct Transfer Page
Log in to your Penny Credit Union online banking account or mobile app. Find the “Transfer Funds” action using the site’s or app’s menu. Then locate the option for external transfers and select an option along the lines of “Link an external account.”
Step 2: Provide Proof That You Are the Account Owner
Provide Penny Credit Union with the account number and routing number for your Hoarder Bank account when prompted. To determine your account and routing numbers, you can reference a check. The nine-digit number in the bottom left is your bank’s routing number, and the number immediately to the right is your account number.
Step 3: Verify the Account
Penny Credit Union will then ask to verify the external account, typically by using a third-party program to log in to your other account on your behalf or by making minor deposits and withdrawals.
The first option requires that you provide Penny Credit Union with your username and password for Hoarder Bank. This can get messy if you have two-factor authentication turned on for the Hoarder Bank account. The benefit of this option is that it’s immediate, but the drawback is that you’re providing personal information to another institution.
The second option may take longer, but it’s also more likely to be secure. In this scenario, Penny Credit Union will make multiple deposits into your Hoarder Bank account, typically amounting to less than $1. Don’t get too excited; the credit union will immediately withdraw that money, and then you have to report the deposit amounts to confirm the account is yours. This can take multiple business days.
Step 4: Move the Money
Once you have linked your Penny Credit Union and Hoarder Bank accounts, you can transfer the $5,000 from one to the other. You will also be set up for all future bank-to-bank transfers.
At most banks, you can typically only withdraw funds from a savings account six times in a calendar month before being rejected or incurring fees.
ACH transfers are the easiest, safest, and often most convenient way to transfer funds from one bank account to another, but there are other, less elegant methods.
Writing Yourself a Check
You can also transfer money from one bank account to another by simply writing yourself a check. For example, if you want to transfer $100 from the Penny Credit Union checking account in the previous example to your Hoarder Bank savings account, grab your credit union checkbook and fill out a check for $100, addressed to yourself. Then head to Hoarder Bank to deposit it (or use your smartphone app to complete a mobile deposit).
Write something like “Bank-to-bank transfer to Hoarder savings” on the memo line to jog your memory about that particular check when balancing your checkbook.
Withdrawing and Depositing Cash
Don’t have a checkbook? No problem. If you don’t mind driving to your bank (or at least a nearby ATM), you can withdraw the amount of money you’d like to transfer from one account, then simply drive to the second institution (or an ATM) and deposit the funds.
Avoid paying ATM fees by using an in-network ATM.
Transferring Money to Someone Else’s Account
As much as we’d like to hoard all our pennies (and dollars and even Ben Franklins) to ourselves, sometimes we need to send money to someone else’s bank account. There are a few common ways to do bank transfers with another recipient.
Using a Wire Transfer
You can conduct a wire transfer at a bank or with an external provider, like Western Union. Wire transfers tend to be faster than ACH deposits (domestic can be same-day and international is typically overnight to a few days) and are often the preferred method when making a down payment and/or paying closing costs for a house when a lender is involved.
However, wire transfers are costly (for the payer and the payee) compared to alternatives. Here are the median costs for sending money via wire transfers:
Domestic incoming: $15
Domestic outgoing: $25
International incoming: $15
International outgoing: $49
To send money via a wire transfer, you must know the recipient’s name, the recipient’s account and routing numbers, your own account and routing numbers (if not going through your own bank) and the recipient’s contact info (name, address and phone number should suffice). You will typically also need to provide a photo ID.
Theoretically, you could also use a wire transfer to send money from one of your own accounts to another, but as this is costly, this should be your last resort.
Writing a Check or Paying Cash
If the recipient can meet with you in person or wait until you can mail a check — and then doesn’t mind depositing the funds themselves — you can also transfer money to them by writing a check or withdrawing the funds from your account (at the bank or an ATM) and paying in cash.
Don’t pay in cash if you need an electronic record of the payment; save cash for transfers with family and friends, like giving your college student gas money or paying your neighbor for shoveling your driveway.
Money Transfer Apps
Money transfer apps are growing in popularity, so much so that Venmo has its own social media feed that lets you see what your friends are paying each other for. As long as you and your pay recipient both have the same app, transferring funds is no problem (and instant). Common apps include PayPal, Venmo, Cash App, Zelle, Apple Pay, Google Pay and Chase QuickPay.
To use the app, you have to link it to your bank account, which requires much of the same work as linking your bank accounts for ACH transfers does.
As an example, here are the steps you need to take to link your bank account to PayPal:
Log in to PayPal on a computer or via your smartphone app.
Click “Wallet.”
Click “Link a bank.”
Search for your bank.
Use Yodlee to confirm your bank account by providing your username and password (immediate) or link your bank manually by providing the checking and routing number (one to three business days).
If you go the manual route, PayPal will make two small deposits into your account and then immediately withdraw them. You will then need to report the deposit amounts to confirm that the requested account is yours. You may want to consider this option for security reasons.
You can also link a card instead of a bank, which will allow you to start making transactions faster, but using a card instead of a bank costs money. This is true of most payment apps.
Pros and Cons of Different Transfer Methods
So what’s the best way to transfer money from one bank to another? It depends on the urgency with which you need to transfer it, how much you need to transfer and how much you’re willing to spend for added efficiency and/or security. Here are some of the benefits and drawbacks of each.
About ACH Transfers
Pros
No cost
Typically no (or high) limit on amount to be transferred
Safe and reliable
Cons
Typically takes between two and three business days
About Wire Transfers
Pros
Fast (can be same-day)
Relatively secure
Cons
High fees for payer and payee
Varying limits on amount to be transferred
About Money Transfer Apps
Pros
Fast transfer
Easy, mobile-based process
Cons
Takes longer to fund account from app
Can carry fees
Limits on transfer amounts
About Checks
Pros
No cost if you already have checks.
Cons
No guarantee of immediate deposit by recipient
Can require mail or physical meet-up
Risk of being lost
About Withdrawals and Deposits
Pros
No cost (assuming no ATM fees)
Cons
Less paper trail
Greater risk of loss or theft
Requires physical exchange
What You’ll Need When Transferring Funds
Whenever you’re transferring funds via ACH or wire transfer, you’ll need to know:
The name of the bank to which you are transferring funds.
The recipient’s full name (either your name if transferring to your own account or the other person’s full name if moving money to someone else).
The account type to which you are transferring (checking or savings).
The routing number, which is a bank’s nine-digit code that uniquely identifies it as a financial institution that is either federally or state chartered and carries an account with the Federal Reserve.
The account number, which is unique to you or the recipient.
The recipient’s personal information, including phone number and address.
When transferring via app, you can typically search for the recipient’s username or handle. If you are expecting someone to send you money via a payment app and you have a common name (cough cough Tim Moore), ensure that you either create a unique username or confirm with the person sending you money that they have the right boring combination of first name + last name + number.
When writing a check, you only need to know the recipient’s name or company to which they would like the check made out. If mailing the check, you will obviously need to find the recipient’s address.
Timothy Moore covers banking and investing for The Penny Hoarder from his home base in Cincinnati. He has worked in editing and graphic design for a marketing agency, a global research firm and a major print publication. He covers a variety of other topics, including insurance, taxes, retirement and budgeting and has worked in the field since 2012.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.