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How to Dispute Credit Report Errors

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Your credit reports are maintained by each of the three national credit bureaus: Experian, Equifax and TransUnion. These important documents list how much money you owe on your credit cards and the balances on any auto, student or mortgage loans you might carry. They also list any financial mistakes you’ve made in the recent past, everything from missed and late credit card payments to bankruptcy declarations and foreclosures.

This information makes up your three-digit credit score, the number lenders use to determine if they’ll lend you money or extend you credit. A high score means you’re more likely to qualify for the best credit cards and loans at lower interest rates.

That’s why it’s so important to make sure that the information on your credit reports is accurate. A single mistake on these reports could send your credit score tumbling — and errors aren’t as uncommon as you might think. In fact, a report by the Federal Trade Commission in 2012 found that 26% of participants in a study found at least one potential error on their credit reports. That same study found that 5.2% of the participants who corrected these mistakes saw their credit scores increase enough so that they would be more likely to nab a lower interest rate on a loan.

Fortunately, it is easier today to dispute and correct a mistake on your credit reports. And doing so could help you improve your credit score.

How to dispute errors in your credit report

It’s easier to dispute items on your credit report today, because you can open an inquiry with each credit bureau online.

When you find an error on your credit report, you’ll work directly with the bureau that issued the report. You might have a mistake on your TransUnion credit report while your reports from Experian and Equifax are error-free. In this case, you’d start an online dispute with TransUnion.

Log onto the bureau’s dispute resolution center — using the information listed earlier in this story — and click on the appropriate button to start a new dispute. Doing this will bring up your credit report with an option to dispute each piece of information on the report. Once you locate the incorrect information, whether it is a credit account still listed as open even though you’ve closed it or a late payment that you believe is inaccurate, click on the “dispute” option for that item.

You will then have the option to select a reason for your dispute. If you’ve never paid your auto loan late, but Experian reports that you have, you’d be able to explain using a dropdown box that you never paid that bill late.

Once you’ve selected all the items you want to dispute, you’ll be given the option to upload documents that help prove there is a mistake in your report. Take advantage of this: the more information you can provide, the better your chances of winning your dispute. If Equifax lists a late credit card payment from April 2017, attach the credit card statement from that month showing that you paid your bill on time. If TransUnion lists an auto loan as being open even though you’ve paid it off, upload your title paperwork showing that you own the car free and clear.

After you submit your online dispute, the credit bureau will send you alerts by email confirming that an investigation has been launched. The bureau will also send you emails every time there is new information about your dispute and when the investigation has been concluded.

You can also write a letter to the credit bureau if you’d prefer that method to opening a dispute online. Again, you can contact the bureaus using the information listed earlier in this story.

According to the Federal Trade Commission, your letter should include your complete name and address and should clearly identify each item in your report that is incorrect. Include the reasons why an item is incorrect and request that the offending item be removed or corrected.

The commission recommends sending a copy of your credit report with the incorrect items circled or highlighted. You should send this letter by certified mail, with a return receipt requested. This way, you can be certain that the credit bureau will have received your letter.

The Federal Trade Commission also recommends that you contact the institution that provided the credit bureau with the incorrect information. If the bureau reports a missed payment from your mortgage lender and you are disputing this, contact your mortgage lender, too, to inquire about the mistake.

Sample dispute letters for credit bureaus and creditors

Want to send a dispute letter to one of the three credit bureaus? Here is a sample dispute letter provided by the Federal Trade Commission. Just fill in the blanks when you send it.

The Federal Trade Commission recommends that you also send a dispute letter to the company — bank, lender or credit card provider, usually — that send the information you think is incorrect.

Here is a sample letter, provided by the FTC, for that step in the process:

What happens after you submit a dispute

The credit bureaus are required to investigate your dispute and will usually do so within 30 days, according to the Federal Trade Commission. Once you submit your dispute, either online or by writing, the bureau will forward your information to whatever organization provided it with the information in dispute. If you are disputing a late payment by one of your credit card providers, the credit bureau will send your information to that provider.

If the company does find that the information you are disputing is incorrect, it must then notify all three credit bureaus so that they can correct the information in your reports.

Once the investigation concludes, the credit bureau must provide you the results in writing, along with a free copy of your credit report if the dispute ended with a change. The bureau will also send you a written notice that contains the name, address and phone number of the company that provided the incorrect information.

Where to dispute credit report errors

You can report credit report errors online — however, we recommend doing it both in writing and online. If you do not like the outcome of the dispute, a paper trail will be helpful if you want to continue pressing for a change in your credit report. Plus, a written letter, sent by certified mail, can be more effective.

TransUnion

You can dispute with TransUnion at dispute.transunion.com, or contact the bureau by phone at 1-800-916-8800. You can also dispute information on your TransUnion report in writing at TransUnion, LLC, Consumer Dispute Center, P.O. Box 2000, Chester, PA 19022.

Equifax

You can dispute online with Equifax online at equifax.com/personal/disputes/. If you’d prefer to dispute in writing, you can send a letter to Equifax Information Services LLC, P.O. Box 740256, Atlanta, GA 30374-0256. You can also call Equifax at 1-866-349-5191.

Experian

You can dispute online with Experian at www.experian.com/disputes/. You can dispute in writing at P.O. Box 4500, Allen, TX 75013.

How to check your credit report for errors

The first step to checking your credit reports is to order your free copies. You can order one free credit report from each of the three credit bureaus every year from AnnualCreditReport.com. Be sure to only order your reports from this site. Other sites offering free credit reports might try to sign you up for credit-monitoring services that you might not need.

But once you get your reports, how do you check them for errors? The key is to figure how credit reports are organized and what information they contain.

Your credit reports start with a list of personal information, including items such as:

  • Your full name
  • Current and recent addresses
  • Telephone number
  • Social Security number
  • Date of birth
  • Spouse’s name
  • Current and recent employers

Reports also contain a section for three types of public records: bankruptcies, tax liens and civil judgments. (Credit reports won’t list arrests, misdemeanors or other non-financial records.)

Maybe you failed to pay a tax bill. Your credit report would list the amount of the unpaid taxes and the filing date of a tax lien against you. If you’ve recently declared bankruptcy, your report will list the type of bankruptcy you’ve filed, the filing date of your bankruptcy and the court in which you filed.

You don’t want public records listed on your reports;these will cause your credit score to tumble. Fortunately, these records don’t stay on your reports forever: foreclosures and Chapter 13 bankruptcies fall off your credit report seven years after their filing dates, while Chapter 7 bankruptcies disappear from your report after 10 years.

Another important part of your credit reports is the accounts section. This section lists your credit card accounts and balances, and the balances of installment loans like auto and mortgage loans. Your report will list these accounts as either open, negative or closed.

For instance, your credit reports will list a mortgage loan that you are still paying off as open, including the loan’s current balance, the date you took out the loan and the lender behind the loan. Reports will also list whether you have any late or missed payments on this loan and will list whether the loan is open — meaning you are still paying it off;closed — you’ve finishing paying off the mortgage;or in foreclosure.

This section will list open credit card accounts, too, listing your current balance, the highest your balance has ever been and whether you are late on your payments.

If you are interested in a sample credit report, credit bureau Experian has a good example here.

Common errors in credit reports

Certain errors are more likely to pop up in credit reports. The Consumer Financial Protection Bureau warns consumers to look for:

  • Errors made in your personal information, including reports that list your name incorrectly or contain an incorrect address or phone number.
  • Closed credit card accounts that are still listed as open.
  • Credit card or installment loan payments reported as late, even if you paid them on time.
  • Debt that is listed on your report more than once, possibly with different names for each listing.
  • Reports might say you owe more on your credit cards than you actually do.
  • Reports might list credit limits on your accounts that are too low.

If you spot any of these errors, make sure to correct them. All of them could impact your credit score.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Dan Rafter
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Dan Rafter is a writer at MagnifyMoney. You can email Dan here

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Personal Loans

Personal Loan Options for Veterans in 2018

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Military veterans can face financial challenges after their service ends. Some are injured while serving, and face mounting medical bills. Others need additional training or education to land jobs when their service ends.

The 2017 Military Family Lifestyle Survey released by Blue Star Families and the Institute for Veterans and Military Families provides a snapshot of some of the financial concerns veterans often have. According to the survey, 49% of military families have less than $5,000 in savings. Further, 28% of military spouses are unemployed and trying to find work, and the 51% of military spouses who were working earned less than $20,000 in 2016.

Veterans and their families, then, might look for personal loans as a way to help cover financial emergencies or unexpected bills. Veterans might take out credit to cover an emergency, such as unexpected car repairs or a new furnace for their home during winter.

How personal loans work

A personal loan is different from auto loans or mortgages in that they are usually unsecured. This means that you don’t have to put up collateral to qualify for one.

With a mortgage loan, your home acts as collateral. If you stop making your monthly payments, your lender can take ownership of your home through the foreclosure process. With an auto loan, your vehicle is your collateral. Your lender can take possession of your car if you default on your payments.

With an unsecured personal loan, lenders can’t take anything from you if you stop making your payments — you haven’t put up any collateral. Although that means there is less risk for you, there is a negative to this: Lenders often charge higher interest rates with unsecured personal loans because they are taking on more risk.

On the positive side, personal loans are flexible. You can use the money you borrow to pay for just about anything. (Of course, it might not be wise to take out a personal loan to pay for something frivolous, like a dream vacation.)

What about secured personal loans?

You can find secured personal loans, too: These loans do require collateral, and do give lenders something to take back should you stop making your payments. Often, your home or car might act as collateral.

But other lenders offer what are known as share secured personal loans, where your savings account acts as collateral. The amount of money you can borrow is limited by the funds in your savings account with the financial institution. If you fail to make your payments, your lender can keep the money in your account.

5 personal loan lenders for military families

The key when hunting for unsecured personal loans is to study the interest rates, loan limits and fees that lenders charge. There are significant differences even among those lenders who specialize in working with military families.

When shopping personal loans, you can reach out to local banks and credit unions to see what options they have for veterans. However, it may be more convenient and affordable to work with online lenders.

LendingTree, the parent company of MagnifyMoney, can help you see offers from lenders through this helpful personal loan tool. Simply enter some basic information about yourself and what you’re looking for, and you’ll be able to compare lenders.

To help you on your search, consider the following five personal loan lenders.

Company
Min Loan Amount
Max Loan Amount
Interest Rate
Loan Term
Navy Federal Credit Union

$250

$50,000

7.99% - 18.00%

60

months

Apply Now Secured

on Navy Federal Credit Union’s secure website

USAA Bank

$2,500

$20,000

8.99% - 10.99%

12 to 84

months

Apply Now Secured

on USAA Bank’s secure website

PenFed Credit Union

$500

$25,000

Starting at 6.49%

60

months

Apply Now Secured

on PenFed Credit Union’s secure website

Citizens Bank (RI)

$5,000

$50,000

5.99% - 18.99%

36 to 84

months

SEE OFFERS Secured

on LendingTree’s secure website

$5,000

$100,000

3.34% - 16.99%

24 to 144

months

SEE OFFERS Secured

on LendingTree’s secure website

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Your APR may differ based on loan purpose, amount, term, and your credit profile. Rate is quoted with AutoPay discount, which is only available when you select AutoPay prior to loan funding. Rates under the invoicing option are 0.50% higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice. Payment example: Monthly payments for a $10,000 loan at 3.34% APR with a term of 3 years would result in 36 monthly payments of $292.31.

Navy Federal Credit Union

As its name suggests, Navy Federal Credit Union serves members and veterans of the U.S. military. But the credit union isn’t open only to members or veterans of the U.S. Navy — it’s also open to those who are serving or have served in the Army, Marine Corps, Air Force and Coast Guard. Civilians working with the U.S. Department of Defense can join this credit union, too, as can the immediate family members of military personnel or Department of Defense employees.

Based in Merrifield, Virginia, Navy Federal Credit Union got its start in 1933. It had more than 8 million members as of the third quarter of 2018.

The credit union offers a standard, unsecured personal loan to service members and veterans with APRs ranging from 7.99% to 18.00%, depending on borrowers’ credit histories and the length of the loan. Members can take out unsecured personal loans with terms of up to 180 months.

There are some limits, though: Navy Federal Credit Union will only approve a maximum loan term of 60 months and a maximum loan amount of $50,000 for most of the unsecured personal loans it originates.

You can take out a longer-term unsecured personal loan if you want to use the funds to pay for a home-improvement project. Navy Federal Credit Union will approve you for a loan with a term of 61 to 84 months if you borrow at least $25,000 and a term of 84 to 180 months if you borrow at least $30,000.

Navy Federal Credit Union also offers a Shares Secured Loan. In this case, the collateral is your savings account at Navy Federal Credit Union. If you take out a shares secured loan for $5,000, Navy Federal Credit Union will hold this amount of money in your account. You’ll be able to access these funds as you pay off your loan. If you fail to make your payments, Navy Federal Credit Union can repay itself by taking these funds.

The rate on these loans varies according to their length. For shares secured loans with terms up to 60 months, the interest rate is equal to whatever rate you are earning on your Navy Federal Credit Union share account plus 2%. For terms of 61 to 180 months, the interest rate is equal to the rate you are earning on your Navy Federal Credit Union share account plus 3%. You must borrow at least $25,000 for 61- to 84-month terms and $30,000 for terms of 85 to 180 months.

Navy Federal does not charge origination fees for its personal loans.

A loan from Navy Federal Credit Union is good for those borrowers who need long-term loans with lower monthly payments. Navy Federal Credit Union allows borrowers to apply for loans with repayment terms of five years or longer, long loan terms that will result in smaller monthly payments.

Veterans who need to make costly home repairs can benefit from a personal loan here, too, as Navy Federal offers long-term loans that are designed solely to fund home-improvement projects.

Navy Federal Credit Union is also a good fit for borrowers with strong credit scores. These borrowers will have a stronger chance of qualifying for the lowest rate of 7.99%. Borrowers with weaker credit might have to shop around: Longer-term loans here come with high rates, especially for those buyers with lower credit scores.

USAA

Based in San Antonio, Texas, USAA had more than 12 million members, as of the end of 2017. This organization is open to active and former members of the U.S. military, eligible family members of active-duty personnel or veterans and cadets and midshipmen.

USAA offers unsecured personal loans with terms ranging from 12 to 84 months. You must borrow at least $2,500, but there is no maximum loan amount.

APRs will vary based on your credit. USAA says that borrowers can qualify for personal loans at APRs of 8.99% – 10.99%.

USAA does not charge any origination fees for its personal loans. USAA also says that it can often provide funds on the same day that borrowers apply for personal loans.

These loans are best for veterans who have ended their military service with strong credit scores — these veterans will qualify for the lowest possible interest rates. However, rates can rise quickly for those with weaker credit. The top rate of 10.99%, for instance, is quite high, veterans might consider shopping around with online lenders to search for a lower rate.

A USAA loan is a good fit, too, for veterans who need money quickly. It is possible to get your cash from a personal loan on the same day that you apply.

PenFed Credit Union

PenFed Credit Union launched in 1935 and today has more than 1.6 million members. It serves members in all 50 states, the District of Columbia, Guam, Puerto Rico and Okinawa. This credit union is open to active and retired military members, family members of these military personnel and employees of the U.S. government. You can also join an advocacy group such as the National Military Family Association or Voices for America’s Troops to become a member.

PenFed Credit Union offers personal loans to these military members that come with no origination fees and APRs starting at 6.49%. You can take out a loan with a term of up to 60 months. It’s important to note that this lower rate is only available to borrowers with excellent credit. Your rate might be higher if your credit is lower.

You can borrow from $500 to $25,000 from PenFed Credit Union.

A personal loan from PenFed Credit Union may be a good fit for military members and veterans who are looking for a low-cost way to borrow funds. PenFed Credit Union doesn’t charge origination fees, and the 6.49% interest rate is solid if your score is strong enough.

There are some limits, though: Unlike some of the other lenders serving military personnel and veterans, PenFed Credit Union doesn’t offer loans with longer terms such as 84 or 180 months.

Citizens Bank

Unlike the previously-mentioned financial institutions on this list, Citizens Bank doesn’t work specifically with veterans or their families; this is a traditional bank open to anyone. Citizens Bank, though, does work with veterans, mainly through a partnership with the Military Warriors Support Foundation. In conjunction with the organization, the bank awards mortgage-free homes to service members who have been wounded in combat, and to Gold Star spouses whose partners have been killed in combat.

Citizens Bank does provide quick funding for their personal loans, with the bank able to provide loan dollars often within two business days. Citizens Bank also doesn’t charge fees, and will originate loans from $5,000 to $50,000 with terms ranging from three to seven years. Depending on your credit, Citizens Bank charges APRs ranging from 5.99% to 18.99%.

Citizens Bank does not charge an origination fee for its personal loans. To qualify for a personal loan here, you’ll need a minimum annual income of $24,000 and what the bank calls a “strong credit history.”

Who is a good fit for a personal loan here? You’ll do better if you a strong credit score. You want to qualify for that 5.99%, not a rate of 18.99%. This is also a good option if you need money quickly, as some loans can close and payout within two business days.

LightStream

Veterans don’t have to work with credit unions that specialize in serving military personnel or with traditional brick-and-mortar banks. They, like many customers, might find that an online bank is their best fit for a personal loan. If so, LightStream, the online lending arm of SunTrust Bank, might be a good choice.

LightStream provides personal loans with APRs of 3.34% to 16.99%, if you sign up for the lender’s auto pay system. Your rate will depend on your credit score, the amount you want to borrow and the term of your loan. If you don’t sign up for auto pay, your interest rate will run from 3.84% to 17.49%.

You can borrow between $5,000 and $100,000 with a LightStream personal loan. The terms of your loan can run from 24 to 144 months. LightStream does not charge any origination fees for its personal loans.

A LightStream loan is a good fit for a veteran who needs flexibility. LightStream offers longer-term loans with terms of up to 144 months. Stretching your loan out to that length of a term will leave you with a smaller monthly payment. These loans are a good fit, too, for veterans who have maintained a strong credit score — that low interest rate of 3.34% is a strong one. If your credit score is excellent, you might consider applying for a personal loan here.

Conclusion

There are plenty of options for personal loans, whether you work with a credit union that targets veterans, an online lender or a traditional bank or credit union. The key is to shop around for the lowest possible interest rate. Make sure, too, to work with a lender that doesn’t charge origination fees. There are plenty that don’t, so there’s little reason to work with one that charges this fee.

LendingTree
APR

5.99%
To
35.99%

Credit Req.

Minimum 500 FICO

Minimum Credit Score

Terms

24 to 60

months

Origination Fee

Varies

SEE OFFERS Secured

on LendingTree’s secure website

LendingTree is our parent company

LendingTree is our parent company. LendingTree is unique in that you may be able to compare up to five personal loan offers within minutes. Everything is done online and you may be pre-qualified by lenders without impacting your credit score. LendingTree is not a lender.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Dan Rafter
Dan Rafter |

Dan Rafter is a writer at MagnifyMoney. You can email Dan here

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Eliminating Fees

What You Need to Know About Wire Transfers

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Need to send money quickly? Or maybe someone wants to send money to you fast. If so, a wire transfer might be the solution.

In some cases, like closing on a new home, it might even be a requirement. But the term wire transfer is often confused with other types of electronic transfers including services from places like Western Union, ACH transfers and peer-to-peer payment apps such as Venmo or Square Cash. We’ll explain the differences and how to complete a wire transfer safely.

What is a wire transfer?

Speed is what sets a wire transfer apart from the other services we mentioned earlier. With a wire transfer, you can send money electronically from your bank account to another person’s or company’s bank account instantly. And if you are owed money, a company or individual can send money to you with the same speed.

If you are sending a wire transfer domestically — to another individual or company in the United States — the funds you are sending should be available during the same business day. If you are receiving funds from a company or individual based in the country, you should also receive those dollars in your account the same day.

Wire transfers happen quickly because they are electronic. When someone asks for a “bank wire,” a bank or credit union sends funds to an account holder at another bank or credit union through an electronic network. The most common of these networks are SWIFT, Fedwire or the Clearing House Interbank Payments System known as CHIPS.

There are two main types of wire transfers: domestic and international.

  • A domestic wire transfer occurs between individuals or companies in the same country. These transfers can happen quickly. To complete a domestic wire transfer, you’ll usually just need some basic information such as the recipient’s bank name and address, the bank’s routing code, also known as its ABA number and bank account number.
  • An international wire transfer happens when a person or company sends money to an individual or company in a different country. For an international wire transfer, you might need to provide additional information. For instance, Bank of America says that you’ll need to state the purpose of the wire transfer, the currency that the recipient of your transfer is using and the recipient’s SWIFT code or International Bank Account Number, better known as an IBAN.

How to complete a wire transfer

Fortunately, wiring funds is an easy process. The fastest way usually involves signing up for online banking at your local bank and then initiating a transfer from your financial institution’s online banking portal.

Wells Fargo, for instance, recommends that its customers sign up for its online banking and then visit the “Transfer & Pay” section to enroll in its wire transfer service.

You then simply choose the recipient of your funds and the account from which you want to send your money. You might have to provide additional information if you are sending funds to a different country.

There might be a limit on how much money you can send through a wire transfer. For instance, if you a completing a wire transfer from Chase online, you can only transfer a maximum of $100,000 a day if you have a personal account at the bank. You can transfer up to your available bank account balance if you send a wire transfer through the phone or by visiting a branch in person.

Make sure, though, that you have enough funds to cover your wire transfer. Your bank won’t complete your transfer if you don’t have enough money in your account to cover the amount you want to send.

How long does a wire transfer take?

Speed is the biggest advantage of sending a wire transfer. It’s no surprise, then, that wire transfers can take as few as one business day to clear.

Gurnee, Ill.-based Consumers Credit Union says on its website that it usually takes half a business day for the funds from a domestic wire transfer to arrive in an account. If you send a transfer to a U.S. account in the morning, the funds will usually be available that afternoon.

Wiring money to international destinations takes longer, usually from three to five business days. TD Bank, for instance, says on its website that international wire transfers usually take three to five business days to close.

How much does it cost to send a wire transfer?

Most banks and credit unions will charge a fee to send a wire transfer. These fees vary according to the bank or credit union you are using.

Ally Bank, for instance, charges a $20 fee every time you wire money to another financial institution in the U.S.

Citibank, though, charges a range of fees depending on the type of account you have with the institution. Citi’s fees for domestic wire transfers range from $17.50 to $25. It charges more for international wire transfers, $20-$35. Citi does waive both its domestic and international wire transfer fees for customers with higher-level accounts.

Bank of America charges a $30 fee for outbound domestic wire transfers, $35 for international transfers sent in foreign currency and $45 for international wire transfers sent in U.S. dollars.

You might also have to pay to receive wired funds. Wells Fargo, for instance, charges $15 for its clients to receive a wire transfer.

Are wire transfers safe?

Wire transfers are generally safe, if you are wiring money to someone you know or to a company for a service provided. Even then, it’s recommended that you call to confirm wiring instructions rather than rely on emailed instructions — read more about phishing scams targeting homebuyers below.

Scams can happen when people wire money to strangers, both in the U.S. and in other countries.

The Federal Deposit Insurance Corporation says that criminals like wire transfers because the money in these transactions arrives in bank accounts so quickly. Because of this, criminals can get their money before their victims discover they’ve been scammed.

Why would anyone wire money to a stranger? The FDIC says that scammers might convince victims to wire them funds to claim their winnings from a lottery that doesn’t exist. Others might offer victims a profitable work-from-home opportunity, but require a wire transfer of funds to get this opportunity started.

The FDIC recommends that you always ignore requests from strangers asking you to wire them money. As the agency says, this is usually the sign of a scam. Anytime someone pressures you to wire money quickly, you have probably been targeted by a scammer.

A common scam? The FDIC says that a criminal might call you, saying that one of your loved ones is stranded in a foreign country and needs you to wire cash so this relative can get home.

The best way to avoid scams is to only send money to people you know and companies that have performed a service for you or from which you have ordered a product. Never wire money to a stranger, no matter how convincing a story that stranger may be telling.

Mortgage closing scams. Fraudsters take advantage of the flurry of emails common at the end of a homebuying process as the closing date approaches. A common phishing email might falsely claim that wiring instructions have changed, instructing the homebuyer to send closing funds to an account that scammers control. Even if you don’t receive any suspicious emails, it’s good to call your real estate agent or settlement agent to confirm instructions and that funds have “cleared.”

Wire transfer vs. ACH payment

Wire transfers and ACH payments are similar. Both are ways to send money from one account to another without the use of physical checks.

But an ACH payment — a payment made with the help of an automated clearing house — differs from a wire transfer because it relies on what is known as a batch process. ACH payments typically power the transactions you make when you use online banking to pay bills.

Your bank will receive ACH transactions in a batch, which are then processed by the Automated Clearing House. Then, these transactions are dispersed to the proper bank accounts.

Because of this extra step, it takes longer for the money from an ACH transaction to show up in your account. The money could appear in your account the next business day, though this can vary depending on your bank.

Alternatives to wire transfers

You could always choose a personal check or cashier’s check, but if you want to send money to another source electronically, you do have some other options. However, if you’re looking to skirt your bank’s wire transfer fees, several of these have fees of their own.

Apps: You can use financial apps such as PayPal, Square Cash and Venmo to send money to service providers and individuals. Beware, though, that “instant” transfers usually carry a fee — Venmo, for example, charges $0.25 for a transfer to an eligible Mastercard or Visa debit card.

Be careful with these, though. As with wire transfers, you might fall prey to a scammer. Never send money to a stranger. And if someone you don’t know requests money from you through an app such as PayPal or Venmo, don’t send anything unless you can verify that the request is legitimate.

ACH transfers: As mentioned above, Automated Clearing House transfers — better known as ACH transfers — can help you move money from your bank account to the account of another. The money, though, often won’t show up for several business days.

Most banks don’t charge ACH fees, but Bank of America is an exception, charging $3 for its customers to send an ACH transfer to another bank account.

Money transfer services: Western Union or MoneyGram transfers are sometimes called “wires” and although you could walk into a Western Union store today, send money (for a fee) to your sister in Dubuque, Iowa, that she pockets a few minutes later, it would take longer to show up in her bank account.

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Dan Rafter
Dan Rafter |

Dan Rafter is a writer at MagnifyMoney. You can email Dan here

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