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ACH vs Check: What Are the Differences?

By Jacqueline DeMarco · July 18, 2022 · 5 minute read

We’re here to help! First and foremost, SoFi Learn strives to be a beneficial resource to you as you navigate your financial journey. Read more We develop content that covers a variety of financial topics. Sometimes, that content may include information about products, features, or services that SoFi does not provide. We aim to break down complicated concepts, loop you in on the latest trends, and keep you up-to-date on the stuff you can use to help get your money right. Read less

ACH vs Check: What Are the Differences?

Nowadays there are plenty of options for moving money around, and two of the most common, ACH and checks, have some key differences. Both of these popular payment methods are convenient and secure, so it can be hard to know which one to choose. But in your financial life, there will probably be times when one is a lot better suited to your needs than the other. Don’t worry, we’re going to walk through everything that’s important to know about ACH payments and checks to help you use the right method.

Keep reading for a breakdown of ACH vs. check, the pros and cons of each, and how they stack up. Then you’ll totally understand the differences between the two.

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What Is ACH and How Does It Work?

An ACH transfer (named after the Automated Clearing House network) is an electronic banking transaction that is processed through the ACH network. The network is a major financial hub, made up of around 10,000 institutions. Through the ACH network it is possible to process the following transactions:

•   Direct debits

•   Direct deposits

•   Direct payments

•   Electronic checks (eChecks)

•   Electronic funds transfers (EFTs)

Businesses and consumers have the option of using ACH transfers to make direct payments (known as ACH debit transactions) or direct deposits (ACH credit transactions). Some financial institutions even make it possible to schedule and pay bills electronically via ACH transfers. You are probably familiar with ACH transactions when you set up autopay on an account, whether its a utility bill or your gym membership.

You may wonder how long ACH transfers take. Because they are electronic, ACH transfers can clear banks in a matter of a few business days as long as there are enough funds in the account. However, there are times where ACH transactions will take longer. This is especially common if a transaction is suspected to be fraud.

However, for something like a direct deposit of a paycheck, ACH can be quite quick. When the payment hits your checking account, it’s immediately available. You don’t have to run around with a paper check that needs to be deposited. That can make a big difference between getting paid by ACH vs. a check, for sure.

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Pros and Cons of ACH

Like any financial tool, ACH transfers have some advantages and disadvantages worth considering. Here’s a closer look at some important pros and cons.

Pros

Cons

•   Free. Most ACH transfers are free

•   Errors can be reversed. You can sometimes request a transaction reversal for ACH transfers if an error occurs

•   Simple and straightforward. Convenient form of payment allowing you to pay without cash

•   Fees can apply. May need to pay a fee to expedite bill-pay services or to make a transfer to an outside bank

•   Slow timeline. Can take up to three days for a transfer to go through

•   Potential roadblocks. Daily transfer limits apply

What is a Check?

A check is a payment method that involves making a payment using a paper check that has the payment amount and the payee’s bank account information on it. Once someone writes a check, the recipient can cash it and receive the funds.

Pros and Cons of Using a Paper Check

Checks are one of the most basic and time-honored financial tools at your disposal. They allow you to move money around without paying a fee, and they are a secure way to do this. What’s more, checks create a paper trail with proof that funds have been received.

But they can wind up costing you, they can take longer than you might expect, and sadly, there are scams that prey upon those who use checks. Let’s see what some of the pros and cons of using a check to make payments or to receive payments are in chart form.

Pros

Cons

•   No fees. Electronic payments can come with fees but there are no fees associated with checks.

•   Safe way to send money. Cash can be lost or stolen. If a check is lost or stolen, the person who finds it will have a hard time cashing it thanks to handy security features.

•   Proof of payment. Checks have a paper trail confirming proof of payment.

•   Check scams exist. Check scams can be dangerous and easy to fall for.

•   Checks cost money. Typically, you don’t pay a fee when you use a check, but it costs money to buy checks, and depending on your situation, you might have to pay a fee to cash a check at some locations.

•   Processing delays occur. Paying by cash, credit, or electronic transfer can occur more quickly than paying by check.

ACH vs Check: The Differences

Now that we’ve examined both separately, let’s look at what the difference is between ACH and checks side by side. It’s important to note that both have their own unique set of advantages and disadvantages, but overall stack up against each other fairly evenly. Much of the choice about which to use will depend on your particular circumstances and preferences. Here’s the difference between ACH and checks.

ACH

Check

•   For the most part, ACH transfers are free unless a rush fee or a fee for transferring to an outside bank applies.

•   It is sometimes possible to request a transaction reversal for ACH transfers if an error occurred.

•   ACH payments are fairly simple and easy to conduct.

•   ACH transfers can take a few days to clear.

•   There are no fees associated with checks, but consumers do have to buy the checks to be able to use them.

•   Checks offer a safe way to make payments. Even if they are lost or stolen it’s hard for anyone other than the recipient to cash them.

•   Checks provide a conienvent paper trail that cash payments lack.

•   Checks can take several days to clear.

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Which Should You Consider Using?

There’s no right or wrong answer when it comes to choosing a check over an ACH transfer. Both have unique advantages and disadvantages. Consider these scenarios:

•   Because it’s possible to set up recurring ACH transfers, that can be a much more convenient option if someone wants to schedule ongoing payments such as rent or bills.

•   Checks, which are very secure and convenient, may be a better fit for one-off payments such as paying the babysitter or a hairdresser.

As you see, the decision depends on what best suits your needs for a particular transaction.

The Takeaway

It’s worth understanding the difference between check and ACH payment options. Both ACH transfers and checks offer benefits. They are very secure, can transfer money within a few days, and provide easy ways to make payments. Neither is better than the other; they’re just different. Which one is the “best” will often depend on the unique preferences of both parties involved in the transaction. You may well find yourself toggling between the two during your everyday financial life.

While you’re thinking about which kinds of payments work best for you, consider this great way to bank better with SoFi. Our linked checking and savings accounts, when opened with direct deposit, offer an easy way to help your money grow. You’ll earn a super-competitive APY, pay no account fees, and get access to your ACH paycheck up to two days early.

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FAQ

Is an ACH payment a check?

No, ACH payments are an electronic transfer processed through the Automated Clearing House network, which is a network made up of around 10,000 financial institutions. A check is a different kind of payment, using a paper document and being processed in a different way.

Is ACH better than checks?

Not necessarily. Whether or not an ACH is a better payment method than a check depends on the unique preferences of the two parties involved in the payment. That being said, generally ACH payments are free whereas it costs money to buy checks for use.

Is ACH cheaper than checks?

When it comes to check vs. ACH costs, ACH payments can be cheaper than checks in some cases, but not always. ACH payments are free, whereas consumers generally need to buy checks to use for payments. However, you may run into fees when doing an ACH payment.

Is ACH safer than a check?

Both checks and ACH transfers are very secure, but ACH payments are known to be more secure, thanks to the extra layers of protection in place due to encryption that occur during the transfer. Both checks and ACH transfers do require that the identity of the recipient be verified before the transaction can complete. Fraud and mistakes can occur for both payment types.


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SoFi members with direct deposit can earn up to 3.25% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 2.50% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 11/3/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet
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