Updated: Mar 18, 2024

What is an ACH Transfer?

Learn more about ACH transfers, which are common for moving funds between bank accounts electronically.
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ACH transfers, or Automated Clearing House transfers, are transactions that are handled electronically. They differ from paper checks, which are processed manually.
Although you may not be familiar with the term, you most likely have dealt with ACH transfers before. If your employer has ever paid you through direct deposit it was done through an ACH transfer.

The Automated Clearing House is an electronic network that handles many financial transactions in the U.S. This network is so reliable that even the U.S. Government uses ACH transfers for its business endeavors.

Why Use ACH Transfers?

  • Your checks can’t get lost or stolen
  • You won't have to make last minute trips to the ATM or physical branch bank to deposit a check
  • Your funds become available within one to two days
  • ACH Transfers save you money on postage and check costs

ACH transfers should not be confused with Wire transfers, as they usually are for smaller amounts and used on a more frequent basis. ACH transfers are a good option for people who are always on the run and like to use technology to keep their lives organized.


Businesses Propel Popularity of ACH Transfers

ACH transfers aren't only for individual consumers looking for convenience. Businesses have been able to save money by accepting automatic payment from customers via ACH, according to the Federal Reserve Bank of New York.

In fact, the ACH was initially introduced because of the stockpiles of paper documents businesses were accumulating in the 1970s. Many businesses, at the time, were not able to effectively manage all the checks and documents they had to deal with on a daily basis.

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