Think about the Automated Clearing House (ACH) network as a computer system that works like a postman for the electronic money world. It's just like the way the postman collects and delivers your letters at certain times. In the same way, this ACH network collects and sends money requests together, in a big group, making it a cheaper and safer way to move money around. The downside is, it can take a bit longer than other ways to move money.
So, what exactly is the ACH network? It's like a big digital road that lets banks send electronic payments back and forth. This system is run by an organization called NACHA. NACHA takes care of this network for about 11,000 banks and other financial groups all over the U.S.
How long does it take for money to move through this system? On average, it can take one to three days. But there are two types of transactions, and each one has its own speed rules.
One type of transaction is called ACH credit. This is when money moves from one bank account to another, like when you get your paycheck directly deposited into your bank account. This usually takes about two days.
The other type is ACH debit. This is when money gets taken out of a bank account, like when you pay a bill. This type of transaction has to be completed within one business day.
But, it's important to know that banks sometimes hold onto transactions for a day or two to make sure there's enough money in the account to cover it. That's why it can take anywhere from one to three days for a transaction to go through. Some banks can also do same-day transfers for an extra fee, but if you do it after their business hours, it might not show up until the next day.
So, how does an ACH transfer work? Here's a simple rundown:
Someone starts a transfer.
The bank that's starting the transfer puts it together with other transfers and sends them out all at once. Depending on when this happens, it could be sent within the hour, or it might not be sent until the next business day.
The transfer gets sent to a place that sorts them and sends them to the right bank. This happens five times a day.
The receiving bank checks to make sure there's enough money, which could take one to two days.
Finally, the money gets put into the account it was sent to.
There are a few things to keep in mind, though. ACH transfers are good for most things, but not everything. They might not be the best choice for really urgent payments, or for sending a lot of money at once. Also, they can only be used for sending money to U.S. bank accounts, so you'll have to use another method for international transfers.
ACH Settlement Times
Because ACH transfers are done in groups and aren't instant, they can take one to three days to show up in the other account. This is slower than wire transfers, credit card transactions, and ATM transactions. And while some banks let you send money faster for an extra fee, it depends on the bank's rules.
Transfer Windows
ACH transfers happen five times a day at 6 a.m., 12 p.m., 4 p.m., 5:30 p.m., and 10 p.m. Eastern Time (ET). When the money shows up in the other account depends on the rules of the receiving bank.
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