How to Transfer Money Between Accounts at Different Banks

How To Oct 27 How to Transfer Money Between Bank Accounts

As a personal finance writer, I’m often answering questions from friends and family about basic financial principles. When someone is setting up a savings account for the first time, they’ll often ask, “How do I actually move the money from my checking to my savings?”

It seems like such a simple concept, but transferring substantial capital almost always involves jumping through some hoops. You can’t just call up your bank and ask them to move the funds, and actively withdrawing and then depositing the money is an unnecessary hassle.

If you want to transfer money between bank accounts, here’s the best way.

How Banks Transfer Money

Every bank uses the the Automated Clearing House (ACH) system to transfer money. When your employer sends your paycheck via direct deposit, they’re using the ACH.

The ACH was created in the 1970s as a faster alternative to checks and a cheaper solution than wire transfers. It’s an electronic system that transfers money in large batches overnight. In addition to being faster than most other transfer options, the ACH is more secure than wire transfers and other types of electronic payments.

How to Transfer Money from One Bank to Another

Transferring money between different bank accounts is a common need for most people. I myself have three different banks I use for my personal and business needs, and I initiate transfers between them at least once a week.

Setting up external transfers can be confusing, so let’s use a hypothetical example to explain how it works. Bank A is the bank you’re transferring money out of, and Bank B is where you want to send those funds.

First, you have to log onto Bank A and click on the “Transfer Funds” section. Then, you’ll click on “External Transfers” or “External Accounts” and from there, “Add an external account.”

To successfully add an external account, you have to verify your Bank B account with Bank A. Bank A needs proof that you have access to Bank B, and that you’re the rightful account owner.

Bank A will ask for the account and routing number for Bank B, which you can find easily on a check or on Bank B’s online statement. You also need to tell Bank A if your account with Bank B is a checking or savings account.

Then Bank A will ask you to verify your account with Bank B in one of two ways: you can give Bank A the username and password you use for Bank B, which will instantly verify the account and make it ready for external transfers. You could also ask that Bank A initiate two small transfers to Bank B. You will not know how much Bank A will transfer; the only way to find out is by logging onto Bank B and seeing how much Bank A deposited.

Once the two small deposits have successfully gone through, you will log on to Bank A and go to the “External Accounts” section. There should be a part that says, “Verify your deposits” where you will enter the amounts that were transferred to Bank B. This process takes at least 1-2 business days.

Once the amounts are verified, you are now able to transfer money from Bank A to Bank B with no problems. You can set up recurring or one-time transfers, depending on your needs. Bank transfers usually take between 2-3 business days to go through, so remember to plan ahead.

Typically, transferring money between two accounts is free, but sometimes there’s a limit on how much you can transfer at one time. This depends on your bank and their own internal rules.

Alternatives to Bank Transfers

If you want to send money from your bank account to someone else’s, you’ll have to find an alternative to bank-to-bank transfers. That’s because you need to be the account holder at both banks in order to send or receive money.

Here are some other solutions:

PayPal: You can send money to someone else’s PayPal account for free through the “send to family and friends” option. PayPal is a fast method, so soon as you send the money it will appear in the other person’s PayPal account. From there, they can transfer it to their own bank account.

Chase QuickPay: Chase QuickPay lets you send money from your Chase bank account to someone else, who doesn’t have to be a Chase customer. If you have a Chase QuickPay account, you can also send an invoice and request that someone else send you money.


Zina Kumok is a freelance writer specializing in personal finance. A former reporter, she has covered murder trials, the Final Four and everything in between. She has been featured in Lifehacker, DailyWorth and Time. Read about how she paid off $28,000 worth of student loans in three years at Debt Free After Three.

This article has been updated since it was originally published on Oct 1, 2013.

Comments (8) Leave your comment

  1. Dear Lord, you still live in the stone age!
    Do you know how we transfer money from one bank to another in Brazil?
    1. Ask the account number for the people you want to transfer the money (Bank B, for example…but it could be C, D, E).
    2. Open your bank app (Bank A) with your password or your fingerprints.
    3. Choose the transfer option and fill the gaps with your friend’s information.
    4. Use your fingerprints or password to confirm.
    5. Your friend will receive the money in MINUTES.

    Generally, you will not pay a cent if you make until 4 money transfers in a month.
    If you are transfering a large amount of money, someone of the bank will call you to confirm that you are really doing that.
    You don’t need verification from the other bank or anything like that. Just the account number and that’s it.
    I don’t even remember the last time I use a check. Maybe 5/6 years ago…but definitely not for transfering money.

    1. I’m not sure you read this post very carefully. She never mentioned using a check (although in fact, use of checks is actually still very common) to make the transfer, only as one option for finding the bank routing numbers.

    2. That is the way it works in Mexico too! there this thing called SPEI (Sistema de Pagos Electronicos Interbancarios or Electronic Interbank Payments System).
      Every account has a unique 18 digit number regardless of the bank it was opened (internal account numbers may vary in the number of digits) and that is all you need to send yourself or someone else money, just this universal 18 digit number for the account you are sending money to, and the transfer arrives in minutes if not seconds.

      I don’t know if there’s a limit on the number of transfers you can do each month, but if there is I have not reached it.

  2. Ok, so here’s my question about the ACH. I will stay with the example of moving money from my bank A account to my bank B account, but I want to initiate a process from the bank B by adding an external account A there. Am I going to be charged only bank B fees (if any), or actually both bank A and bank B fees?

  3. So it would seem that I would need two PayPal accounts to transfer money to another of my banks rapidly. I’m trying to find a fast transfer method. PayPal will not allow you to add money to it via debit card, but you can make purchases or send money via debit card. When you receive money in PayPal you have the option for ACH or pay 1% for instant transfer via debit card to your bank. So it seems I require 2 PayPal accounts. Send money to “family/friends” instantly, then receive it myself with the other PayPal and transfer instantly to that bank.

  4. Just use Google pay with your debit card. My wife and I swap money back and forth using only debit cards. No fees and instant transfer.

  5. Thanks for this great guide about money transfers. I would like to add one more point to the alternative list:

    TransferWise is the cheapest and fastest method of sending international money payments.
    If you signup with the link you can save fees for more than $600 dollars!

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