In today’s world, it’s effortless to send and receive money. When doing so through a banking institution, there are two numbers that are vital to have. The account and routing number help you acquire, withdraw, and transfer money with convenience.
A routing number is nine digits long and serves as a number to identify the bank your account belongs with. It’s unique and only designated once. It is the first set of numbers at the bottom of checks, and each set of numbers serves a purpose. A routing number also allows banks to track where the money came from and its being transferred.
However, an account number is specific to your account and helps identify your account information amidst every other account within a banking institution. Account numbers
are typically between 10 and 12 digits but can be as long as 17 digits. While the routing number cannot be changed, an account number would be different in the event of multiple accounts under one banking institution.
The process of transferring funds using these numbers is straightforward, but it comes with fees. Luckily there are several ways you can transfer without dealing with expensive costs. Let’s look at the importance of these numbers when transferring funds.
ACH vs. Wire Transfer
A routing number is required when transferring money to or from one bank account to another bank account. This is called a bank to bank or an ACH transfer. This process of transferring funds utilizes ACH (automated clearing house) and usually takes between one and two business days. However, it may be received the same day or several business days, depending on the institution.
ACH transfers can be processed in two ways; through debit and credit transactions. ACH differs from wire transfers as they tend to be more convenient, secure, and in most cases, cheaper. In addition, wire transfers are sent right away and can be received on the same day internationally.
ACH and Wire Transfer Costs
Although wire transfers are faster, they can be much more costly than ACH. In order to wire money to a bank account within the US costs between $20 and $30 bucks. If you’re wiring outside the US, it could cost between $40 and $50.
There’s also a fee for receiving wire transfers which usually costs $15 to $20 dollars.
Wire transfers are ideal for large amounts that need to be transferred fast. ACH is suitable for sending money to daily & friends, receiving paychecks & other deposits, and paying bills.
How to Save Money and Avoid Transfer Fees
There are numerous ways to save on transfer fees or avoid them altogether. Some of these practices are dependent upon the banking institution, while others are more common. Here are five ways that could help you save on transfer fees.
Complete Wire Transfers Online
Transferring money online could be cheaper than in person or on the phone. Completing it through your banks’ site could help you save money. Generally, banks only charge between $5 and $10 to wire funds online.
Wire Transfer Where You Already Have an Account
If you already have an existing account somewhere, you strengthen your chances of avoiding transfer fees. If you have a strong relationship with a bank, some will allow free wire transfers. You won’t be charged for either incoming transfer or incoming and outgoing transfer if it’s coming from an account within the same institution.
Some banks also allow you to save from recurring wires. For example, if you frequently send money to the same account, banks may cheapen the fees by a few bucks each time you transfer.
Keep in Mind ACH Transfers Are Usually Cheaper
If you’re transferring between banks, remember that ACH transfers are much cheaper or free, depending on who you bank with. So although ACH transfers could take a little bit longer, it could be worth it if you’re looking to save on fees.
Consider Receiving Transfers From a Student Account
Some banks waive transfer fees for student accounts. If the funds come in from a student account, the costs may get waived entirely depending on who you bank with. However, remember that it may only be allowed once or twice a month.
If your bank allows it, consider currency conversion. Some banks will help you lessen fees by converting US dollars to a foreign currency before the transfer if you’re sending abroad. This could help to reduce the cost of fees.
4 Alternative Ways to Transfer Money
Despite all the ways you can transfer money, you must have both a routing and account number. While few instances don’t require both, you will need each to successfully transfer money most of the time.
Some banks don’t charge fees to wire money, but some do. These fees usually cost from $15 to $20 bucks. While this isn’t exactly expensive, it can add up over time. You can often reduce those amounts by using a student account for ACH transfers if you can or by converting your currency.
The speed of your transfer depends on the financial institution and if you’re willing to pay for an instant transfer, but in most cases, you can expect it to go through within one business day.