What is a wire transfer?
Similar to ACH transfers, a wire transfer is a type of electronic funds transfer that allows people and businesses to move large amounts of money quickly. It's called wire transfer because banks used to use "wires" to facilitate the money movement. The money is typically moved through the SWIFT (Society for Worldwide Interbank Financial Telecommunications) network and requires the sender to pay the money upfront before the money is sent to the recipient financial institution.
What are some of the things to consider?
A wire transfer can be a convenient way to move money. In fact, many property purchase closings require wire transfers. However, there are a few things you should consider:
- Wires are often more expensive than ACH. Depending on the bank, wire fees can cost money to send and to receive.
- Wire may yield more risk. Payments are typically impossible to reverse since the money is pre-funded before being sent to the recipient.
- Wire transfers are faster than ACH. Most wire transfers are processed within the same business day or the subsequent business day, based on the bank's cutoff time.
- Wire transfers can be sent internationally. Wire transfers run on a network that coordinates money movement across the world.
- Wire transfers may be required if certainty is needed. Typically, wires are required during mortgage closings.