Wire Transfer (3/21/06)

Wire transfers are something that everyone has heard but isn’t always sure what they are exactly and what the benefits are of using this form of electronic funds transfer (EFT).

What is a wire transfer?
A wire transfer is an electronic transfer of funds from one bank to another using the Federal Reserve wire system. It is the safest and fastest way to send funds between accounts at separate banks. There are businesses specifically designed to do this type of EFT, such as Western Union. Many people don’t know that you can do a wire transfer directly from your bank account.

Why would you do a wire transfer?
There are three primary benefits to doing a wire transfer instead of sending a check.
1. Speed: In many cases, a wire transfer takes less than one business day to reach its destination.
2. Reliability: In order to send a wire, there are many levels of verification so you can be confident that the funds reach their intended destination. Wired funds are much more reliable that sending a check through the mail. Especially if the funds are traveling overseas. International mail is very unreliable and recovering funds from fraudulently endorsed checks is a very big hassle. (a customer of mine sent a $5,000 check to Isreal. The funds were obtained through a fraudulent endorsement and it took nearly four months to recover the funds from the foreign bank.)
3. Security: There are additional regulations that bank representatives must follow when taking a request for a wire transfer. It takes more than just your signature to send a wire transfer.

Fees
Because there are additional levels of security in sending a wire transfer, there are fees associated with sending them. There are also fees to receive a wire transfer. Foreign wire transfers are more expensive than domestic. Fees to send a domestic wire transfer are often between $10 and $20 at your bank. You’ll pay more at Western Union and you’ll need to have cash in order to do it. If you’re sending a large amount or sending funds overseas, it’s worth it.

How do you send a wire transfer?
In order to send a wire transfer, you’ll need to have the following pieces of information:
1.Name and location of the bank you’re sending funds to.
2. Routing number of the bank you’re sending funds to.
3. Name and account number of the person you’re sending the funds to.
4. Some banks require the address of the person you’re sending the fund to.

If you have to send a large sum of money, or you need it to get there quickly and safely, send a wire transfer. Don’t roll the dice with the postal service (no offense to my postal worker friends).

Feel free to put your horror stories about lost checks in the mail in the comments section.