Do you need to send money to someone right away? Maybe you are putting a downpayment on a home, or a sick relative is requesting money for medical care or your child is away at college and needs help paying for an unexpected expense. Sending money by wire transfer is quick – if you are sending it domestically – and easy, but there are some things you should know before you do it.
What is a wire transfer?
In today’s day and age of online banks, websites and apps, everyone seems to call any form of sending money a wire transfer. Truth is, a traditional wire transfer is sending money to someone, either domestically or internationally, from one bank or credit union to another through their secure systems, such as SWIFT or Fedwire. Today, sending wire transfers also includes using alternative providers such as Western Union, TransferWise and MoneyGram.
Sending a wire transfer is simple to do. All you need is the recipient’s full name and address, their bank account number and their bank’s routing number, SWIFT/BIC/IBAN code, and the amount you want to wire. Some banks and credit unions allow you to send wire transfers through your account online, while others require that you come in and fill out paperwork. Once all the paperwork is filled out, the bank will charge you a fee for the service (more on that below) and your money will be on its way. Pretty simple.
It’s important to note that your bank or credit union might have limitations as to how much you can transfer. Western Union, TransferWise and MoneyGram also have limitations. For example, Western Union’s domestic transfer limit ranges from $300 to $2,500 and various countries have limits on how much can be sent at one time, so verify that information first.
How long does a wire transfer take?
How long a wire transfer takes to reach the recipient depends on quite a few factors. Domestic wire transfers are typically sent the same day but depends on how the recipient is receiving the money. For example, if they are picking it up at a Western Union location, they may be able to receive it in just a few hours. A domestic bank-to-bank wire transfer, such as from Chase Bank, can take from one to two business days. However, sending an international transfer can take a few extra days, because it depends on your bank and the country’s processing system that you’re sending it to.
Western Union actually states that funds may be delayed or services rendered unavailable based on certain factors, including the amount sent, destination country, currency availability, regulatory issues, identification requirements, agent location hours, differences in time zones, and selection of delayed delivery options.
In addition, Chase’s Global Transfer stipulates that they process wire transfers through their own internal review process and may contact the sender to verify their request, which could delay the delivery.
As a result, an international wire transfer could take up to a few days to show up in the recipient’s account, so it may not be not quite so instant, but it is faster than mailing a check.
How much does a wire transfer cost?
The fee for sending a wire transfer also depends on a variety of factors – such as the amount you are sending, whether you are sending the money through your bank or through an alternative provider like Western Union, whether you are sending the funds online or in person and whether the transfer is domestic or international.
Domestic wire transfers can start at $4 through Walmart, which uses MoneyGram. Ally charges $20, for example, while Wells Fargo charges $30. International wire transfers can become much more costly. For example, banks typically charge about 5% on the daily exchange rate in addition to hefty international money transfer fees, so a $10,000 transfer could cost you up to $500 in fees to your bank, plus other fees.
Some banks and credit unions do not charge a wire transfer fee to their account holders, but there might be stipulations. For example, Chase Global Transfer does not charge a wire fee if their account holder is sending an online wire of $5,000 USD or more to a bank outside the U.S. in foreign currency.
Keep in mind too, that you can send a wire transfer through such services as Western Union or TransferWise using money from your credit card, but your credit card company considers the transfer a cash advance and will charge you higher cash advance fees and interest rates. This is in addition to the fees you will be charged from the service you use.
Keeping your money safe
Hopefully you have never fallen for the “You won a trip, now wire us a deposit to hold your spot!” scam and you’re sending your wire transfer to someone you know and trust. There are many such wire transfer scams out there, including one where you’ve been told that you won a jackpot and need to secure your money and another where Facebook scammers pose as your friends who direct message you that they are in trouble and need money. Once you wire the funds, you may never see your money again.
The Consumer Financial Protection Bureau has issued rules to protect consumers who send money electronically – typically over $15 – to foreign countries. It won’t cover every situation, so you should still be careful who you are sending money to, but it does provide some protection. For example, rules generally require that banks and wire transfer companies disclose the exchange rates and fees that are collected by the company and information on when the funds will be available to the consumer before sending the transfer.
If there are any problems, the rules also require that consumers have 30 minutes (and sometimes more) to cancel a transfer and companies must investigate if the consumer has a problem or that the money has not arrived.
Here are a few tips to keep your money safe from fraud:
- Know the person or business you are sending your money to.
- If your friend messages you on Facebook that they are in trouble and need money, take caution. Ask them a question only they would know the answer to or ask for some other proof of identification.
- If you are purchasing a home and receive a phone call from a settlement company to send money in order to close, verify that information with your mortgage broker before sending a dime.
- Do your due diligence: Make sure the items you purchase and the person you purchase them from are legit.