how long does an ach transfer take

ACH transfers: What they are and how long do they take

Simply speaking, an ACH transfer allows money to move between different accounts, but, there is a whole lot more to them than just that.

What is an ACH transfer?

Starting with the basics – ACH is an acronym that means “automated clearing house.” Transfers are done electronically between banks, with services processed through the ACH network by Nacha (previously: National Automated Clearing House Association). The network connects financial institutions together and processes these transactions.

Chances are, you have used ACH transfers without even knowing. If your paychecks are deposited to your checking account through direct deposit or if you pay your bills online, you are using ACH payments. ACH transactions can also be used to make deposits into IRAs, college savings accounts and more. ACH transfers allow the sending of money between business owners and vendors or to receive payments from customers. 

In addition, if you send and receive money through apps like Zelle, Venmo or PayPal, you are using an ACH transfer. ACH transfers allow people to send and receive money from the comfort of their home. The process is not only convenient, but also a very secure way to send money back and forth. 

how long does an ach transfer take

Types of transfers

Currently, there are two ways that these transfers are processed, each with different costs and processing times. ACH transfers are often simpler than paying with a paper check or a credit card.

ACH credit transfers

An ACH credit transfer is the “push” of money from online accounts to different banks or accounts you own. In this type, the payer is the one who triggers the funds to be sent.

ACH debit transactions

This payment method type “pulls” money from an account and deposits it in another. An example of this comes from automated bill pay. With automated bill pay, the company charging you will pull the money you owe from your account each month.

How long does an ACH transfer take?

ACH transfers usually take several business days to be delivered. This is the main reason they are different from wire transfers, which are processed in real-time. In addition, transfers are processed by operators in large batches a couple of times a day – ACH transfers may differ in payment processing times.

Financial institutions and banks have slightly different rules when it comes to ACH credit transfer and are usually either delivered same-day or within one or two business days. A debit transfer must be processed by the next business day. Banks may charge a fee to expedite the transfer process.

How is this different than a wire transfer

There are two main differences between ACH transfers and wire transfers: the cost and the processing time.

While an ACH transfer is typically no more than a few dollars, a wire transfer can cost anywhere from $20, up to $30 – not including additional fees for the receiver. However, bank wire transfers are processed in real-time, allowing you to send money instantly, anywhere. ACH transfers have longer processing times, taking up to a few days, while a wire transfer usually only takes minutes. 

Fees and other restrictions

Depending on the type of transfer, there may be fees involved. Typically, ACH debit transfers, like bill payments and payroll direct deposits, have no additional feeds and are free. 

ACH credit transfers may have fees that cost a few dollars to send money between accounts that are located at different banks. Some financial institutions may provide external transfers for free and there should not be any fees involved to receive an ACH transfer.

Apps like Paypal, Venmo or Zelle may require a small fee to make a payment, but that is majorly dependent on the platform and payment method. There may also be fees if the transfer bounces due to insufficient funds. 

There are also a few limitations to ACH transfers including:

  • Monthly caps – ACH transfers have daily and monthly maximums on the amount of money you are allowed to move between accounts.
  • Transfer cutoff times – If a transfer takes place outside an allotted window, the transfer will not be processed until the following business day. This includes after business hours and on weekends.
  • Transfer limits – There are only a limited number of transfers that can be made out of a savings account (6 per month). In addition, ACH transfer cannot be done internationally.

In a nutshell

ACH transfers are an easy, inexpensive way to move money between different accounts. However, be sure to inquire about your bank’s policies on ACH transfers, as it can lead to additional fees and lengthy processing times.

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