Wire transfers are fast, convenient, and safe. For this reason, you need to participate in this activity only after carefully analyzing the pros and cons.
1. Consider the type of money transfer you want to send
You can transfer money both on the domestic and international scene. There is intra-bank and inter-bank transfer. Intra-bank money transfers take place within the same bank.
Both the person sending the transfer and the person receiving the transfer share the same bank. For example, you would transfer from a Bank of America account in New York to a Bank of America account in California.
Inter-bank transfer facilitates money transfers among different banks. As members of an integrated and closed network, banks will allow senders and receivers to pass money among banks.
Networking among banks means Citibank customers can give cash to JP Morgan-Chase customers without worrying about the transaction being blocked because of the difference.
When sending wire transfers internationally, the bigger banks that can afford to have branches in other countries facilitate the exchange of money through Nostro accounts.
Nostro accounts are simply bank accounts that a bank has in a foreign currency. In this exchange, banks eliminate the need for intermediary banks by using swift networks.
Where banks do not have accounts in overseas banks, they use intermediary banks. Of course, using these foreign accounts makes them subject to the laws and regulations in the host country.
2. Consider the cost of doing a wire transfer
Did you know that some banks limit the amount of money you can send overseas per day using wire transfers? The limits tend to be high and so may not affect a transaction you choose to do, but the overall price to use this service is costly.
The fee you pay is determined by the bank you use. It is also dependent on whether you are sending or receiving. One benefit some banks offer is that they do not charge a fee for any wire coming in.
Before sending your wire, check the following:
- Are you sending to non bank providers? If so, then you may face additional fees.
- How are you funding your wires? The fees through credit cards, debit cards, and direct from your bank account are different.
- Does your bank have loyalty programs you can use? Loyalty programs may help you to redeem points and reduce fees when you trade them up.
3. Consider your alternatives
If you prefer not to send a wire transfer, there are options available. You can send money overseas using money transfer services, automatic clearing house transfers, and even person-to-person payment tools.
Independent companies help you bring cash, transfer it, and then the receiver will get the money in hand when they collect. This system of transfer is a type of wire transfer but without the straight-jackets
of bureaucracy. One example is the company Western Union. You can make instantaneous transfers using this cash-to-hand business model.
Transfers are done through automatic clearinghouses and can take up to two business days to process and can be reversed under some circumstances. Person-to-person payment tools like Zelle and Popmoney are relatively affordable and easy to use.
4. Consider protection for your money when doing transfers
Wire fraud is an increasingly popular part of the ills of banking in this twenty-first century. You should consider doing everything remotely possible to protect yourself against this type of fraud.
First off, try not to send money to strangers using wire transfer. Wire transfers are fast and may get to fraudsters and be used up long before becoming victims.
In addition, take note of the urgency with which persons request money using the wire transfer option. If you are pressed too urgently to make such a transfer, take a step back and analyze the person and reason on the receiving end.
Sending transfers to new recipients is cause for intense scrutiny, and thorough reviews as any wrong input of the information result in the money getting diverted elsewhere.
Recovering the money once sent is not straightforward and takes weeks to process. Try considering how you could protect yourself online during these transactions.
There are weaknesses to using a wire transfer, but the strengths lie in its safety, speed, and reliability. Using this method is famous all across the world.