Wire transfers are a form of bank transfer that allows you to send money from one bank to another.
They are not limited to domestic transfers only – you can send money to any international bank using wire transfers.
This electronic transfer method is used all around to world to send and receive money.
Whether you’re looking to wire money for business or personal finance reasons, understanding how they work can save you many trouble and headaches.
How To Wire Money in 6 Easy Steps
Wire transfers are relatively easy and straightforward, especially if it’s not your first time doing one.
Like everything else, it does get easier with time, but if it’s the first time doing a wire transfer, knowing what to expect can save you many headaches and anxiety.
Depending on your situation, some of the steps listed might be unnecessary but are still good to know.
Step 1: Choose the wire transfer service provider.
The first step in making a wire transfer is to choose the service provider. If you’re the customer of a bank or a credit union member, this might be your first choice.
Even so, when choosing where to do a wire transfer, it’s important to go through the checklist to help you choose the best one for your circumstances.
- Bank. Banks are perhaps one of the easiest options when it comes to wiring money. If you’re already a customer of the bank, you should be able to do this through your online banking or mobile banking, saving you the hassle of going to a physical branch. The bank will take the money straight from your checking account or savings account.
- Credit Union. Credit Unions work just like banks. You still should be able to use your internet or mobile banking. The union will take money from your account directly.
- Western Union. Western Union offers the facility to send money all around the world. You can visit a branch or use their website. There is an additional step involved here in that you need to send the money to Western Union first before they can wire it.
- Moneygram. Moneygram works similarly to Western Union. They too offer the option of transferring money through their website or by visiting a branch. If you prefer visiting a branch, call beforehand to accept in-person visits due to the whole pandemic situation.
Step 2: Gather all the required information.
To be able to wire money successfully, you will need to provide some information. This information helps the bank understand where it needs to send the money.
Make sure you check with the financial institution for needed documentation or information.
Most banks and credit unions will need the same information, but some other financial institutions might not.
Sender Information:
- Your full name
- Your telephone number
Recipient Information:
- Recipient’s full name,
- Recipient’s telephone number
- Recipient’s address
- Recipient bank
Domestic Wire Transfer Only:
- Bank account number
- ABA (American Bankers Association) Routing number
International Wire Transfer Only:
- Recipient’s IBAN, SWIFT code, or BIC code.
Step 3: Fill in the required forms.
Once you’ve collated all of the information, you can process to fill in the required forms.
Remember that wire transfers can be pretty hard to reverse, so make sure that you pay extra attention to avoid any mistakes as much as possible.
Step 4: Review the terms and conditions.
While the terms and conditions are not a fun read, taking the time to understand what you agree to can help you avoid unnecessary complications later on.
Try to get a copy in advance and raise any issues or concerns you might have to get the clarifications you need and require.
Step 5: Pay the fee and send the money.
Once you’re happy with the form and the terms and conditions of the transfer, it is time to pay the fee and send the money on its way!
Depending on where the money is being sent, this can take anywhere from a few minutes to 2 days. You can also track the wire transfer through the federal reserve bank.
Remember that if you are using transfer providers other than your bank, you will need to transfer the money that is being wired.
Check beforehand what kind of payment methods they accept to avoid going back and forth because they don’t accept cash or credit cards/debit cards.
Step 6: Confirm receipt of sent funds.
All that’s left to do now is confirm that your recipient has received the funds.
While wire transfers are very secure and accurate, it is always best to follow up on any payments and ensure that the recipient has received the money.
What Is A Wire Transfer?
A wire transfer is simply an electronic way to send money from one bank account to another.
Wire transfers are not the only way to send money with ACH (Automated Clearing House), checks, and P2P payment platforms such as PayPal being some of the competitors.
How Do Wire Transfers Work?
While wire transfers may sound complex, in reality, they’re not once you break it down.
To do this effectively, we’ll look at all of the parties involved in making a wire transfer happen.
Doing this can help you to understand what is going on and how wire transfers actually work.
There are four main parties involved in a wire transfer:
- Sender: The person or who is initiating the wire transfer (sending the money).
- Bank/ Financial Institution: The provider you’ll use to wire money.
- Network Operator: The network operator through which the wire instructions are sent (ex. SWIFT – Society for Worldwide Interbank Financial Telecommunication).
- Recipient: The person or company receiving the money.
The sender goes to the bank or financial institution and requests a wire transfer. The bank will give you a form where you will need to fill in the transfer details (we will cover this in more depth later).
Once you hand in the form and the money (the sum to be transferred and any feed), the bank will wire the money to the recipient through the SWIFT network.
The SWIFT network connects different banks worldwide – and the money then makes it to the recipient’s account.
When To Use A Wire Transfer
You can use wire transfers anytime you want to send someone money. Since they are more costly than other electronic money transfers, wire transfers are used when speed is important.
You can also use wire transfers for sending money internationally. These kinds of wire transfers are also known as remittance transfers under federal law and come with several consumer protections to help you stay safe.
To understand what protections are available to you, you may refer to the Consumer Financial Protection Bureau, run by the United States government.
What To Check Before Making A Wire Transfer
- Transaction Limits. Check if there are any limits on the transaction amount, especially when sending large amounts of money. It’s also worth checking the limits on the number of wire transfer transactions.
- Fees. Check what fees are due for the wire transfer that you want to make since these can vary by amount and destination, and make sure to check whether any additional fees are due before making the transfer
- Processing Time. Check how long it will take for the wire transfer to reach the recipient’s bank and whether cheaper forms of transferring money will take as long.
- Exchange Rate. If you’re making an international wire transfer, you will need to work out the exchange rate when paying in foreign currency to make sure that you send the correct amount
Pros & Cons of Wire Transfers
Wire transfers have some advantages over the competition. Equally, they also have some disadvantages.
Understanding what these are is essential to help you decide if a wire transfer is a suitable money transfer tool for you.
Pros:
- Fast. Wire transfers can be very fast, especially when compared to ACH and checks. Depending on currency and amount, wire transfers can take from a few minutes to 2 business days.
- Safe. In most cases, you will find wire transfers are provided by highly-regulated financial institutions, like the best banks and top credit unions.
- Convenient. Wire transfers allow you to send money pretty much anywhere in the world. If you have internet banking, you should also be able to do this from the comfort of your own home, without having to visit a branch.
Cons:
- Cost. When compared to other methods of transferring money, wire transfer fees can get a little bit costly.
- Reversibility. Wire transfers can be pretty difficult to reverse. Extra attention is well-advised, especially when inputting the required information.
How To Wire Money FAQs
How do I do a bank wire transfer?
You can easily do a bank wire transfer by visiting your bank and initiating a wire transfer.
Many banks such as Bank of America and Wells Fargo also offer mobile apps to do bank wire transfers. In most cases, you can also use these apps to accept an incoming wire.
How much does it cost to wire money?
A wire transfer cost will vary by the amount, currency, and financial institution you choose. While prices are becoming more competitive, wire transfers can still be costly compared to other electronic transfer methods.
Can you wire money online?
Yes, you can easily wire money online by either logging in to your internet banking or mobile banking or visiting a transfer provider’s website. The important thing here is to verify that the website is legitimate to avoid falling prey to online scams.
What is the easiest way to wire money?
The easiest way to wire money is through your bank’s mobile app. You won’t need to go to a branch, so it’s a lot less time-consuming.
Many transfer providers also make it possible to wire transfers through their website. Keep in mind that this will require an additional step as you will need to transfer money to the service provider first, who the FDIC does not insure.
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