With the abundance of money transfer services that have popped up in recent years, wire transfers can seem like an outdated way to send someone the money they need. However, wire transfers are far from obsolete.
While they may be less popular than tapping a button on an app or using an online service like PayPal, they’re still the gold standard when it comes to transferring sums of money in a secure and swift manner.
What Is a Wire Transfer?
A wire transfer is a way to quickly and safely transfer funds electronically from one bank account to another.
With a wire transfer, the recipient has access to the money almost right away, often within the same day for transfers within the United States (international transfers usually take a day or two).
“Wire transfer” is sometimes used as an umbrella term for various types of electronic transfers. Besides a traditional bank wire transfer, you can also use money transfer services such as Western Union that instantly send money to any of the service’s brick-and-mortar locations.
How Do You Do It?
For a bank wire transfer, you’ll need to talk to your bank. Some banks allow online wire transfers, although they may have limits for how much you can send in an online transaction. Give them a call to see what your options are.
If you’re wiring the money in person, make sure to bring an acceptable form of ID with you. Make sure you have enough money to cover any fees on top of the amount you plan on sending. Your recipient may also have to pay a fee for an incoming transfer.
You’ll need to provide some information about your recipient’s bank account, including the name of their bank, the bank’s routing number and their account number. You’ll fill out this information in a wire transfer form.
For non-bank transfers, you can typically transfer money by going to one of the service’s retail locations or their website and choose how you want your recipient to get their money. Western Union, for example, allows you to instantaneously send cash to any of their stores worldwide, where the recipient can pick it up. They also allow you to send money to a bank account, but that can take one or two days.
The fee you’ll pay for these services will depend on your transaction. For example, you may pay a slightly higher fee for funding the transaction with a credit or debit card than if you’re doing a bank-to-bank deposit.
Alternatives to a Wire Transfer
Between PayPal, Venmo, Cash App, Zelle and others, it’s never been easier to send money to other people. While old-fashioned wire transfers are far from obsolete, they’ve definitely had to make room for other popular types of money-transferring mediums, particularly peer-to-peer (P2P) payment systems, which includes apps like Venmo.
There are a lot of advantages to using P2P services for everyday payments. They’re super convenient for those who want an easy way to pay their friends back for smaller things like covering lunch or picking something up at the store without having to carry cash around all the time.
There’s much less effort with P2P payments for both the sender and the receiver. Sending and receiving money requires only a few taps on your smartphone.
Like wire transfers, these services do often come with fees, depending on how the transaction is funded. Typically, transactions will be free if they’re paid for using a bank account or debit card, while a small percentage is taken for credit card transactions, although this varies.
There are a few things that wire transfers do that you generally won’t get with P2P payment systems. For one, there’s usually a limit to the amount of money you can send, either per transaction or on a weekly basis. And though the actual money transfer may show up in the app right away and seem instantaneous, it may take a few business days to process before the recipient actually has access to it. The exception to this is the Zelle app, which offers immediate bank-to-bank transactions.
It’s also relatively easy to accidentally send your funds to the wrong person on an app compared to a wire transfer. If you send money to the wrong person and they don’t send it back, there isn’t much that can be done.
When Should You Opt for a Wire Transfer?
There are probably only going to be a few instances in your life where you need to complete a bank wire transfer.
Remember that wire transfers require more information to initiate than other similar transactions. The benefit of this is the added security, but it also means that it might take a little more effort than simply pressing a few buttons or typing in a credit card number.
A wire transfer is a good option when you need to complete a large transaction. In fact, with big purchases that need to be done securely, such as when you’re buying a house, wire transfers and cashier’s checks are often the only ways you’ll be able to pay, as both of these options are safe and reliable for everyone involved. They’re also commonly used to quickly send money to friends or family who are in need of funds.
Wire Transfer Safety
Wire transfers, while safe when you know who you’re sending the money to, are a lucrative target for scammers, so always take care whenever you’re initiating a money transfer of any kind. While you probably know not to send money to people you don’t know and to watch out for online offers that seem too good to be true, some money transfer scams are pretty sophisticated and can trick even the most diligent of senders.
Beware of the down payment wire transfer scam. If you’re wiring funds to close on a house, confirm the wire instructions via phone call with the person you’ve been working with. Never go off instructions that are sent in an email. Hackers have been known to target home buyers by posing as the buyer’s title company and emailing them instructions for their wire transfers.
If you follow these fake instructions and complete a wire transfer to the thief, it’s unlikely that you’ll get that money back. If this ever happens to you, act quickly. Immediately call your bank and see if they can freeze the transfer, and file a report with law enforcement.
If you do any business through an online payment service such as PayPal, learn about some of the common scams people use and how to look out for them.
Do you prefer the security of a standard wire transfer, or is the ease of a P2P payment app more your style? Share your thoughts in the comments!
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