Bank Transfer

A bank transfer, sometimes referred to as a "money transfer", is a broad term used to describe the transfer of funds from one bank account to another, either domestically or internationally.

Bank transfers can mean slightly different things depending on a wide variety of other factors. Broadly speaking, the term can be used to refer to one of two distinct things:

• A domestic money transfer, where funds are sent from one bank account to another in the same country;
• An international money transfer, where funds are sent from one bank account to another in a different country, usually involving currency exchange.

Bank Transfers: International vs. Domestic

Domestic bank transfers go by many names. In the US, for example, these types of transfers are essentially synonymous with ACH transfers, while in the UK they're known as CHAPS transfers. Within the EU, bank transfers are called SEPA payments, while in Canada they're called Interac e-Transfers. Domestic bank transfers are characterized by banks using a domestic communications network for sending funds from one local bank account to another (i.e. ACH, CHAPS, SEPA, and Interac in the examples above).

In the case of international money transfers, on the other hand, bank transfers are broadly synonymous with wire transfers, where banks around the world send money to one another's accounts using an international communications network called SWIFT.

Learn more about the differences between these two types of bank transfers in our guide here.

The Hidden Costs of Bank Transfers

Generally speaking, domestic bank transfers are relatively cheap to send, and can sometimes even be free.

International bank transfers, on the other hand, are where money transfers get expensive. This is because, when you transfer abroad with a bank, you'll be paying a hidden fee (known as an exchange rate margin) to convert your currency into another currency over and above the standard set of fixed fees, commission fees, and other bank fees that your bank may charge.

At the extremes, many people pay total fees as high as 10-15% or more of their entire transfer amount in order to send money abroad, often making the process incredibly expensive.

Fortunately, there are many low-cost currency exchange providers and fintechs out there which use a savvy network of international bank accounts in order to avoid the SWIFT network altogether, thereby dodging almost all fees for their customers! As a result, users often pay less than 1 or 2% of their transfer amount in fees!

If you're somebody who's interested in taking advantage of these competitive services, we'd recommend that you run a search on our free comparison engine to get the latest rates and best deals on these providers for your desired destination. If you'd like to learn more about how to make cheaper, faster transfers abroad in general, then take a look at our in-depth guide on international money transfers here.