EFT vs Bank Wire

TL;DR

Choose EFT

Explanation

When you link a new bank account to transfer money to or from your brokerage (Fidelity, Vanguard, Schwab, Betterment, etc) it will ask you if you want to use Electronic funds transfer (EFT) or Bank wire as shown in this image:

EFT, also known as ACH (Automated Clearing House) or eCheck, is the same technology you likely use if you have direct deposit from your job. It’s basically a digital check. It’s a silly old technology that takes a few days to move the money but it’s tried and true and free for every bank I’ve ever heard of.

Bank wire is strangely also an ancient technology, but transfers the money within minutes. It’s generally used for very large transactions, like the purchase of a house. Almost every bank I’ve ever heard of charges a hefty fee ($20-$50) per wire you execute, whether sending or receiving. Once the money is gone, it’s gone. So take extreme caution when sending money via wire. Double then triple check the bank account information you’re sending it to. Then call the people you’ve met in person and verify it again.

But for general investments into your brokerage account just choose the EFT/ACH/eCheck option. Other than it being kinda slow, it works great and it’s free.

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Jeremy Circle

Hi, I’m Jeremy! I retired at 36 and currently have a net worth of over $4 million. 

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