How to Transfer Money from One Bank to Another

ElitePersonalFinance
Last Update: January 15, 2021 Banking

We posted a guide describing How To Use Multiple Bank Accounts To Save Money.

The piece outlined how switching from traditional bank accounts to no-fee checking and high-yield savings accounts allows you to keep more of your money. However, to incorporate the strategy, you have to open multiple bank accounts and use multiple institutions.

But that opens up another problem.

Once your accounts are up-and-running, how do you actually transfer funds from one bank to another?

Well, in this guide, we’ll explain just that. We’ll break down the most effective ways to move money across institutions without incurring any fees along the way.

Set up a Bank-to-Bank Transfer

Transferring money from one account to another is as simple as linking the two bank accounts: one account acts as the sender, the other as the receiver.

How to Link Bank Accounts:

  • Log into either account and look for a command that says ‘external transfers.’ You’ll also find a standard ‘transfer’ command, but that’s not what we’re looking for. This is used for transferring money within the bank itself. Once you find the right tab, click on ‘external transfers’ and proceed to step 2.
  • Grab a recent bank statement or a check from the external account. To set up the transfer, you need the ‘routing number’ for the external account. If using a check, it’s the first 9-digits at the bottom left. If you don’t have either, contact the external institution directly, providing the details.
  • Enter your username and password for the external account. To finalize the link, the bank will ask you to input your username and password for the external account or ask verification questions. The point is to confirm that you actually own the external account.
  • Administer a test transfer. Before declaring victory, send a small transfer – say $1 – to the external account to ensure everything is working fine. Make sure you choose ‘one-time’ and not ‘recurring.’ If the test works as planned and the transfer goes smoothly, the funds should arrive in the external account within two to three business days.

Does Transferring Money from One Bank to Another Cost Money?

In most instances, no.

While some banks charge fees to transfer money to outside institutions, many traditional and online banks allow you to move money without additional costs.

Some institutions include:

  • Citibank
  • Chase
  • Barclays
  • Ally Bank

Set up a Peer-to-Peer Transfer

If you prefer the mobile route, you can use either institution’s mobile app to set up an external transfer. The process is the same as above, and you need the external accounts routing number and its username and password.

Some P2P options include:

  • PayPal

If you have a PayPal account, it’s effortless to transfer money from one account to another. Most external transfers take one or more business days to complete. However, the process is free of charge and allows for increase privacy.

  • In-App Platforms

Many traditional and online banks use third-party technology for their mobile apps. As such, in-app services like Zelle or Popmoney allow you to send money to friends, family, or external accounts without additional costs. Within your banking app, look for a command that says ‘send money.’ Many users prefer this method because it is extremely user-friendly and offers a great way to move money from one bank to another.

Write a Personal Check

Another method to move money around is to write yourself a personal check. Write your name as the recipient, fill in the amount, the date, sign it – then deposit the check into your new account. Since many traditional and online banks offer mobile check deposits, the process is actually easier than linking your accounts above. However, if your bank doesn’t allow mobile check deposits, you can also opt for direct mail. Keep in mind that transit time will likely delay the funds for several days.

Why Should I Use Bank Transfers?

As we outlined in our previous article, using multiple bank accounts is a great way to save money on fees or earn more on your investments. Isolating savings, when you link your bank account to an external savings account, you can take advantage of higher interest rates and earn a higher return-on-capital.

For example, check out the average savings account interest rates at traditional banks:

Bank: Average Savings Rate:
Bank of America 0.03%
Wells Fargo 0.01%
Citibank 0.08%
Chase 0.01%
HSBC 0.06%
US Bank 0.01%
SunTrust 0.01%
PNC Bank 0.01%
Huntington National 0.02%
TD Bank 0.03%
Capital One 0.40%

Now take a look at online banks:

Bank: Average Savings Rate:
Marcus By Goldman Sachs 0.50%
Barclays Online Savings 0.45%
HSBC Direct Savings 0.15%
American Express Bank 0.50%
Discover Bank 0.50%
Citizens Access 0.40%
Ally Online Savings 0.50%
Synchrony High Yield Savings 0.60%

Source

Conclusion

While it may seem complicated to link one bank account to another, taking 15 to 20 minutes to do so is more than worth the investment. By linking your accounts, you gain the freedom to move money back and forth whenever you want. Moreover, you also gain access to savings and investment products that were once out of your reach. Now, if linking your bank accounts isn’t for you, we recommend writing yourself a personal check. With mobile deposit, the process couldn’t be easier. You fill in the required information using the institutions’ mobile app and snap a picture of the check’s front and back. Oftentimes, once you hit the deposit, the funds are immediately transferred to your account.

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