The two primary methods to transfer money between banks are electronic and physical transfers. An electronic transfer is usually considered the best way as it is typically faster, simpler, and safer; however there can be fees associated with it. For a physical transfer by check, fees are typically smaller, but there can be a waiting period at the receiving bank. Physically carrying currency from one bank to another is free and the deposit registers immediately, but there are safety and inconvenience factors.
An electronic transfer between banks is usually considered easiest and safest, but there are some drawbacks such as fees and wait times. Most banks offer several options to transfer money electronically including wire transfers, execute transfers, and electronic funds transfers.
- Wire transfers: The normal electronic method to transfer money between banks is called a wire transfer, in which the initiating bank accepts a withdrawal request from an account holder and sends an electronic message to a receiving bank regarding the impending transfer. Perhaps the biggest drawback is that the transfer is not immediate — it can take a few hours or up to one day to complete, depending on the time of day. There is almost always a cost associated with sending and receiving the wire transfer to the account holder, and the customer needs to know both the receiving bank's routing number and the specific account number to which the funds are being transferred.
- Execute transfers: Account holders with third-party services like Pay Pal can do execute transfers, which are done by registering the withdrawing and receiving accounts with the service and passing money through the third-party service. Since both accounts are registered with the same service, the transfer is generally faster than a wire transfer and can usually be completed through the company's website. There can be fees in this type of transfer as well and it takes time to set up the third-party account.
- Electronic funds transfers: Most U.S. banks offer electronic funds transfers (EFT) between accounts within the bank, and to third parties such as utility companies through a bill-paying service. This practice can include transfers to other banks. The customer who wants to routinely transfer money between banks should select an institution that offers this service.
In general, physical transfers have lower fees, but cannot be done over the Internet, which may be inconvenient for some account holders. Transfer fees may vary between banks, as can wait times for large deposits. Some options for physically transferring money include using personal or business checks, cashier's checks, or cash.
- Personal or business check: The best way to physically transfer money between banks is with a personal or business check, as long as the speed of the transfer is not an issue. Transferring by check typically carries no cost in addition to the normal charges, if any, of the checking account that is being used. For this type of transfer, there may be a waiting period of up to 10 business days while the receiving bank verifies the deposit.
- Cashier's check: A faster, though typically more costly, alternative to transfer funds between banks is a cashier's check. This type of check is issued by a bank after the account holder gives that bank money in the amount designated on the check. The receiving bank usually will accept it immediately, but in some cases it must be verified first. There is typically a small cost associated with generating the check.
- Cash: It is possible to transfer money between banks by withdrawing actual currency from one bank and depositing it in another. Most banks do not keep large-denomination currency, so a sizable transfer has the inconvenience of carrying a large number of bank notes. A transfer of money between banks with cash is simplest, but carrying a large amount of money can be dangerous since it could be stolen.