While both ACH and checks have their upsides, ACH tends to be the quicker and more secure payment method. However, in your financial life, there will probably be times when one is a lot better suited to your needs than the other.
Here’s a detailed breakdown of ACH vs. check, the pros and cons of each, and how they stack up.
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 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 it’s 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.
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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, but not all, 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. • Secure. The digital nature of these payments can make them less likely to have funds stolen. |
• 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
While not as popular as in the past, checks are still 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. Here are some of the pros and cons of using a check to make payments or to receive payments in chart form.
| Pros | Cons |
|---|---|
|
• No fees. Electronic payments can come with fees, but there are no fees for standard checks once you purchase them. • 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 usually occur more quickly than paying by check. |
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ACH vs Check: The Differences
Here, a side-by-side comparison of ACH vs. checks. It’s important to note that both have their own unique set of advantages and disadvantages, but much of the choice about which to use will depend on your particular circumstances and preferences.
| 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, but there can be issues with scams and stolen checks. • Checks provide a convenient 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 automated 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
Both ACH transfers and checks offer benefits. They can be convenient, secure ways to transfer money, though ACH may be faster and safer. 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 your banking options.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
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. ACH can be faster, cheaper, and more secure in certain scenarios, but both can be useful ways to make payments.
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 certain ACH payments.
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.
About the author
Jacqueline DeMarco
Jacqueline DeMarco is a freelance writer who specializes in financial topics. Her first job out of college was in the financial industry, and it was there she gained a passion for helping others understand tricky financial topics. Read full bio.
Photo credit: iStock/bernardbodo
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