What Is a Wire Transfer?

Perhaps you’ve found yourself in a situation (or two) where you needed to send or receive money as soon as possible. Whether it’s legal trouble, a large medical bill or an urgent trip, it’s not always easy to transfer money in the blink of an eye. However, in today’s technology era, moving money across the globe quickly has proven to be a very possible task. This is often done through wire transfers. Before diving in, you may want to work with a financial advisor to help you get your finances in order and to better understand what the potential fees or alternative options might be for sending frequent wires.

A wire transfer involves a bank-to-bank electronic transfer of money. You go to your bank to submit the required instructions and information, like the recipient’s bank information. Your bank will then initiate the transfer with the recipient’s bank. Wire transfers also involve a network to travel over. Most commonly, banks utilize Federal Reserve Wire Network (Fedwire), Society for Worldwide Interbank Financial Telecommunication (SWIFT) and Clearing House Interbank Payments System (CHIPS). Fedwire processes only domestic wires, SWIFT largely processes international wires and CHIPS can process both.

Instead of sending money directly to the recipient, however, the amount sent is more of a credit. For example, let’s say you want to wire your mom $500. You make the payment upfront and submit the paperwork to your bank, which then sends the wire to your mom’s bank. Her bank will then deposit $500 into her account from its reserve. Since you paid the amount upfront at the start, the transaction is complete once her bank processes it.

You can send wire transfers both domestically and internationally. International wire transfers are also known as remittance transfers. Domestic wire transfers usually process faster, taking about two days (or fewer) to complete. International wires can take up to a week to process. If the situation is dire, however, you can ask the institution for an expedited transfer. Not all places offer this service though and it can cost you an extra fee.

It’s worth noting that the term “wire transfer” has come to be associated with any electronic means of sending money nowadays. However, not every electronic money transfer satisfies the requirements of an actual wire transfer. In that case, you might want to clarify if someone asks you to send a wire transfer.

What You Need to Send a Wire Transfer

The information you need to provide to make a wire transfer will depend on whether you send a domestic or international wire transfer. When making a domestic transfer, you’ll need to provide your bank with the recipient’s name, address, account and routing number and their bank’s name and address. You’ll also have to specify for your bank which accounts of yours you’d like the money to draw from.

To send a wire transfer through a U.S.-based bank or credit union, you typically use the funds in your checking account. You could also use the funds in a savings or money market account, though.

If you’re sending an international wire, you’ll need all of the same information. However, you will also need a SWIFT code, National ID or IBAN number of the receiving bank to complete the transaction. You’ll want to double-check with the institution you’re using to send the transfer, to make sure you have all the necessary information.

Where to Get a Wire Transfer

Most major American banks offer wire transfers including Bank of America, Chase and Capital One. Credit unions like Navy Federal and PenFed allow members to make their own transfers. While it’s a safe bet that your financial institution can send a wire transfer, it’s also always good to make sure.

If you want to send funds internationally, you can also use transfer services like Western Union or MoneyGram. Typically, you have to pay with cash or a U.S. bank-issued debit or credit card. However, you can sometimes attach your own bank account for payment.

How Much Do Wire Transfers Cost?

Sending a domestic wire through a bank or credit union usually costs anywhere from $10 to $30. However, due to its complexity, sending an international wire can cost you up to $75. The fee banks charge, whether domestic or international, can depend on the amount you’re sending, the receiving bank’s incoming wire fee, network fees and more. International transfers also take into account whether you send funds in U.S. dollars or foreign currency.

When you send a wire transfer through other transfer services like Western Union, the fees can vary. These services take into account how you’re sending the wire, the wire amount and where you’re sending the funds. You may also have to take into account your location’s state and local taxes.

Unfortunately, you’re also subject to fees even as the recipient of a wire transfer. Banks can charge you from $10 to $20 for processing a wire transfer. It often doesn’t matter whether you receive a domestic or international wire, though.

What to Watch out For

A risk that wire transfers do pose is that once you complete your end of the transaction, that money is gone. Moving money across the web is already a risky business. Even as banks and financial institutions evolve their security measures, fraudsters also adapt to security changes.

You’ll want to be wary of wire transfer scams, which start with an almost-too-good-to-be-true deal. You may think you’ve snagged a new apartment, an extravagant vacation or a new car. But before you get your hands on the prize, though, you have to wire money first. This is where fraudsters get you since by the time you realize the scam, it’s almost always too late. Plus, these criminals quickly transfer the money elsewhere making it harder to track and recover.

If you’re the recipient of a wire transfer, you’re less at risk of fraud or interception of funds. While it’s always good to stay alert and on top of your accounts, you only really need to be extra careful when sending a wire transfer.

The Takeaway

Wire transfers offer a quick and reliable way to send money both domestically and internationally. You can easily send a wire transfer from your bank or another financial institution, as long as you provide the necessary banking and personal information. The main downside to wire transfers is their cost since you can end up paying $45 to send one for example. Especially nowadays, there are a number of cheaper, if not free, ways to send money electronically.

Tips for a Successful Wire Transfer

When you’re moving large amounts of money, you may want to get a third-party involved. A financial advisor can help manage all of your assets and make sure that the money is moved safely while limiting the number of fees you end up paying for that service. Finding a financial advisor doesn’t have to be difficult. SmartAsset’s free tool matches, get started now.
Since wire transfers can take a couple days, or a week for international wires, to process, you’ll want to leave ample time between your sending date and the latest desired arrival date. This gives you room to ensure everything runs smoothly. If the transfer is urgent, you may want to look into an expedited delivery, if possible.
Finally, watch out for scams. Assume that any too-good-to-be-true offers, especially over the phone and email, are fraudulent. Always check the legitimacy of the claims before you send any money, if at all. Unfortunately, you can’t do much after sending a wire transfer that you regret.