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Wire transfers are a way to quickly and conveniently send and receive money, both domestically and internationally. Maybe you want to securely send some cash as a security deposit to a landlord across town ASAP. Or perhaps you need to pay for a painting you bought at an auction overseas. Either way, a wire transfer may be a good option.

However, there are often wire transfer fees in exchange for their speed and convenience. The cost to send and receive money via wire transfer varies, but international wires are usually costlier than domestic wires.

However, with the right steps, you can reduce or even eliminate the fees you’ll pay using wire transfers.

Here, you’ll learn important details about this technique for transferring funds, including:

•   What are wire transfer fees?

•   How much do wire transfer fees cost?

•   How do international wire transfer fees vs. domestic compare?

•   How can you avoid wire transfer fees?

•   What are other ways to send and receive money?

What Are Wire Transfer Fees?

A wire transfer is an electronic funds transfer between financial institutions. Wire transfers can be faster than bank transfers, with same-day processing possible for most domestic wires. Wire transfers can occur domestically or internationally, but most banks charge fees both for sending and receiving funds in this way.

In addition to speed, another reason to use wire transfers is when sending money internationally, as a regular bank transfer isn’t possible in this situation. But international wire transfers can have higher wire transfer fees than domestic wires, and there might be more steps involved. For instance, the transaction might have been processed by the foreign country’s system and also possibly involve a currency conversion.

Recommended: ACH vs. Check: What Are the Differences?

How Much Do Wire Transfer Fees Cost?

As mentioned earlier, how much wire transfer fees cost can vary. Some financial firms waive wire transfer fees in certain situations, and others waive them entirely. When sending and receiving international wires, there can be a fee of $50 or more for each transaction

Typically, you might expect the following fees:

•   For domestic wire transfers, outgoing fees usually range from $0 to $35; incoming fees can range from $0 to $15.

•   For international wire transfers, outgoing fees can often range from $35 to $50; incoming fees are likely to be between $0 and $16.

Wire Fees by Financial Institution

Below is a list of wire transfer fees for large banks in the United States. However, third parties may be involved that charge additional fees, especially for international wires.

Do International Fees Cost More Than Domestic?

On average, international wire transfer fees are higher than domestic ones. But as is often the case, averages don’t tell the whole story. Some financial institutions don’t impose wire transfer fees, even for international transactions.

Still, it’s important to remember that there may be extra fees when dealing with international wire transfers. For instance, there may be a currency conversion fee when sending money between two countries that use different currencies. When sending or receiving money internationally, you’ll need information like an international bank account number (IBAN) or a SWIFT code to move the funds to the right account. Overall, it’s a somewhat more complex transaction than a domestic one.

Why Do Banks Charge Wire Transfer Fees?

Banks charge wire transfer fees because of the work that goes into processing wire transfers. For instance, wire transfers are processed individually as they are received. This differs from automated clearinghouse (ACH) transfers, which are processed in batches.

You also pay a premium for the faster processing speed. Domestic wire transfers can sometimes be completed within a few hours and are usually processed the same day. International wire transfers can be completed within one to two business days.

Another reason banks charge wire transfer fees is their higher transaction limits. Wire transfer limits are usually much higher than bank transfer limits, so they can be worth using if you must send a large amount in a single transaction.

Lastly, the international reach of wire transfers can lead to higher fees. For instance, when large amounts of foreign currency are exchanged, banks charge what is known as a midmarket, or interbank, exchange rate. The bank will often charge a higher markup if that currency must be converted. This results in higher wire transfer fees.

Recommended: How to Earn More Interest on Your Money

Tips to Avoid Wire Transaction Fees

While wire transfer fees are common, they aren’t always a given. Here are some ideas about how to avoid wire transfer fees in some situations:

•   Send money in foreign currency. For outbound international wires, it can be smart to send money in the currency used by the foreign company, if possible. In this scenario, some banks waive wire transaction fees since no currency conversion is necessary.

•   Do it yourself digitally. Some financial institutions allow you to initiate a wire transfer using their website or app, and doing so may reduce the fees or even eliminate them.

•   Look for firms that don’t charge wire transfer fees. Some banks and nonbank providers waive wire transfer fees in some cases, or they don’t charge them at all.

•   Open an account with no wire transaction fees. Shop around: Some of the most popular banks offer accounts that let you wire money with no transaction fees.

Alternative Ways to Send and Receive Money

Some methods of sending money may allow you to reduce or eliminate transaction fees. You can do so by using one of the following methods to conduct the transfer:

•   Use a payment app. Payment apps like Venmo, Zelle, and PayPal generally let you send money electronically to friends and relatives without paying a fee. However, sending money to those who are not “friends and family” may incur fees.

•   Send money with a bank transfer. A bank transfer, or ACH transfer, might be preferable if you send money domestically. In 2022, the same-day transfer limit was increased to $1 million, enabling large funds transfers in a single day.

However, note that limits on single transactions might be lower, and there might be ACH fees.

•   Use a cashier’s check. A cashier’s check is an alternative to wire transfers because it can be suitable for large transactions. This type of check draws the funds from the bank’s reserves rather than your account. However, the check must be delivered to you, so this method can take longer than a wire transfer. In addition, there might still be fees involved.

The Takeaway

Wire transfers can be a quick, secure way to send money domestically or internationally. These transfers have several benefits, such as shorter processing times and larger transaction limits than ACH transfers. But wire transfers can also have significant transaction fees, especially when dealing with international transfers.

If you prefer to avoid costly wire transfer fees, look for firms that don’t charge them or offer accounts that don’t charge for wire transfers. You can also consider alternative methods of sending money, like using a payment app or sending a cashier’s check.

If you’re looking for other ways to save on your banking costs, consider opening an online bank account. With SoFi Checking and Savings, for instance, you won’t pay any account fees, and your money will earn a competitive annual percentage yield (APY), both of which can help your cash grow faster. You’ll also spend and save in one convenient place, have a suite of tools (like Vaults and Roundups) that can amp up your savings, and, for qualifying accounts with direct deposit, you can get paycheck access up to two days early.

FAQ

Do you pay a fee to receive a wire transfer?

It depends, but most banks do charge a fee for income wire transfers. However, the fee for incoming wires is usually considerably less (maybe 50% lower) than the fee for outgoing wires.

Why are wire transfers so expensive?

Wiring money can be expensive for several reasons, such as their shorter processing times and higher transaction limits than bank transfers. Also, international wire transfers have more processing steps, which can increase their cost.

Do all banks charge wire transfer fees?

The majority of banks charge wire transfer fees in at least some situations. Some waive them in certain situations, while nonbank providers are more likely to waive them entirely.

Photo credit: iStock/Ridofranz

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOBK1222027

If your paycheck or another check is burning a hole in your wallet, you might be able to cash it at an ATM. Depositing a check into an ATM can be a convenient, painless way to get your cash fast.

If you don’t have access to remote banking or just can’t make it to a bank during business hours, cashing a check at an ATM can be an excellent alternative. Here’s what you need to know in order to make the transaction happen, including answers to:

•   When can you cash checks at ATMs?

•   What are the steps to cash a check at an ATM?

•   What kinds of checks can be cashed at an ATM?

•   What are alternative ways to cash a paper check?

Steps to Cash a Check at an ATM

The first thing you’ll need in order to cash a check at an ATM is a checking account. A checking account traditionally comes with an account number and a debit card. You will need both of these.

Make sure you’ve activated your debit card, selected and memorized a PIN number, and know your account number. The debit card and PIN number are essential for performing the most basic of transactions, including making ATM deposits and withdrawals.

Once you have your account details, card, and PIN number, cashing your check at an ATM is pretty much the same as making a cash deposit at an ATM. Most banks will require you to have a minimum amount in your checking account in order to cash your check.

Here are the steps to cashing a check at an ATM:

•   Endorse the back of your check. With a pen (not pencil), sign your name on the back of your check and write your account number. Security tip: Wait until you get to the ATM location to sign the back of your check, even if you have to bring a pen with you. If an endorsed check gets lost or stolen, someone else could cash it.

However, do add your signature before your turn at the ATM itself to save time and as a courtesy to those waiting behind you.

•   Fill out a deposit slip. Some banks may still require you to fill out a deposit slip to insert into the ATM along with your check. The deposit slips are typically available in the bank branch or the ATM area. Some banks may require you to put a check and the slip into a deposit envelope.

•   Insert a compatible card. To begin the transaction, you’ll need a valid ATM card, debit card, or prepaid debit card issued from a bank or credit union.

•   Enter your PIN. After inserting your card, the ATM will prompt you to enter your personal PIN number. Do not share your PIN number with anyone.

•   Follow the prompts. Follow the ATM’s instructions that appear on the screen. This can involve selecting “Make a deposit” and “Get cash back” and entering a dollar amount.

•   Insert the check into the machine. The ATM will invite you to make your deposit. If no check envelope is used, it will scan your check and ask you to confirm the amount.

If you are a customer who qualifies for same-day deposits, you may be able to withdraw funds right away, essentially “cashing your check” while avoiding additional transaction fees. In other situations, you may only have, say, $225 available to withdraw.

One thing to keep in mind: Even an in-network machine may have ATM withdrawal limits — typically between $500 and $1000 per day.

With some bank’s ATMs and account types, the funds may not be available until the second business day after the deposit. And if you are using an out-of-network ATM, you may be charged additional ATM transaction fees, and it can take up to 5 business days before you see the money in your account.

Types of Checks That May Be Cashed at an ATM

There is more than one kind of check. Personal, cashier’s, and certified checks are all ways to distribute sums of money without the risk of handling cash. But what kind of checks will an ATM accept?

Here are some check types you can feed an ATM that won’t get spit back out:

•   Personal checks. If you find yourself wondering, “Can I cash a personal check at an ATM?”, the answer is “yes!” So, go on — deposit that birthday check from Aunt Trudy. You can even write a check to yourself from another account and deposit it.

•   Cashier’s check. A cashier’s check draws on a bank’s funds and is signed by a cashier to guarantee the money. To cash this kind of check, it is beneficial to use an ATM connected to the bank that issued the check. You can also deposit it in your own bank’s ATM if you want the money to go into your account.

•   Certified checks. Like cashier’s checks, certified checks are issued by the bank but signed by you vs. a cashier. As long as you have your debit card, you can go ahead and deposit it in the ATM.

•   Any pre-printed check. Basically, any pre-printed can be deposited and withdrawn against at an ATM if your bank allows it. Government checks (such as a tax refund check) are the easiest for a bank to verify, and you might get your money right away. Foreign-issued checks may take longer to process.

Do All ATMs Support Check Deposits?

Not all ATMs support check deposits. Some ATMs located in grocery and convenience stores, restaurants, and other businesses may only have the ability to dispense cash and check your bank balance.

If you’re looking to cash a check at an ATM, your best bet is to use the machine at your bank. Most major banks and credit unions support check cashing at their ATMs. Plus you’re likely to avoid ATM fees.

Alternative Ways to Cash a Check

You don’t have to use an ATM to turn your paycheck into paper money. There are other ways to cash a check for free because who wants to pay more in bank fees? These techniques include:

•   Go to a bank teller. If you have time during business hours, you can cash your check the old-fashioned way. Your bank branch or credit union will likely perform the service, as long as you have a deposit slip, debit card, a valid ID, and meet your account’s requirements.

•   Go to the check distributor’s bank. You may be able to cash the check by paying a visit to the bank where the check writer holds the account. This could be a valid option if you are unbanked (don’t have any bank accounts). The check writer’s bank will probably be able to verify that the issuing account is in good standing and extract the funds for you.

•   Mobile apps. Who uses cash anyway these days? If your bank offers a mobile banking feature, also called mobile deposit, and you have a smartphone, you can use their app to snap a photo of your check and deposit it from the comfort of your living room sofa. You can gain access to your money quickly (instantly with some accounts), and pay back your bestie through Venmo.

•   Visit a retail store. Some retail shops, such as Walmart, grocery stores, and even gas stations may cash your check. However, they could charge you a small fee.

•   Check-cashing stores. The name says it all. Check-cashing businesses will give you cash for your check, but typically charge a stiff transaction fee. You may want to pursue other options and save this as a last resort due to the steep charges.

The Takeaway

Using an ATM to cash a check can be a quick and secure way to get your money. As long as you have a bank that supports check cashing, have the minimal required funds in your account, and have your debit card and PIN number ready, you’ll likely be on your way with some green in your hand.

3 Money Tips

1.    Typically, checking accounts don’t earn interest. However, some accounts do, and online banks are more likely than brick-and-mortar banks to offer you the best rates.

2.    When you overdraft your checking account, you’ll likely pay a non-sufficient fund fee of, say, $35. Look into linking a savings account to your checking account as a backup to avoid that, or shop around for a bank that doesn’t charge you for overdrafting.

3.    If you’re faced with debt and wondering which kind to pay off first, it can be smart to prioritize high-interest debt first. For many people, this means their credit card debt; rates have recently been climbing into the double-digit range, so try to eliminate that ASAP.

FAQ

Can you deposit a check at an ATM?

It depends on your bank or credit union, but most banking institutions allow you to deposit checks at an ATM.

How long does it take to cash a check at an ATM?

As long as you’ve endorsed your check, written the account number on the back, and have your debit card and PIN number ready, cashing a check at an ATM shouldn’t take more than a few minutes if the financial institution makes the funds available. Not all ATMs will be this fast; in some cases, it will take at least two days for the funds to clear.

Can any type of check be cashed at an ATM?

As long as the routing and account number are legible, you can insert most traditional check types into an ATM. Personal and government-issued checks will probably be validated and credited to your account faster.

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOBK1222013

Multi-level marketing businesses— also called direct sales, direct marketing, or network marketing — are legitimate enterprises that involve selling products or services to a network of peers (i.e., friends and family) and recruiting more salespeople.

The problem? According to the Federal Trade Commission (FTC), many illegal pyramid schemes disguise themselves as legal multi-level marketing (MLM) companies. Even legal MLMs can be bad news; most people make little or no money with MLMs, and some even lose money.

Read on to learn:

•   What’s an MLM?

•   What are the differences between MLMs and pyramid schemes?

•   How can you avoid multi-level marketing companies?

What Is a Multi-Level Marketing (MLM) Company?

A multi-level marketing business, or MLM for short, is a legitimate business that sells products and services through independent distributors. These companies rely on such distributors to sell to networks of peers, typically friends and families. The distributors, often called “participants” and “contractors,” must also recruit new distributors for the program.

The companies are found in a variety of categories. They might be selling supplements, personal-care products, kitchen utensils, or any other number of items.

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How Do Multi-Level Marketing Companies Work?

What is an MLM company, and how does it operate? In a multi-level marketing business, distributors must first buy the products wholesale from the company. They then make commissions off the products that they sell at retail prices.

Distributors also earn a commission from their recruits’ sales, which incentivizes distributors to recruit more people into the business. Those at the top of the company, with multiple levels of distributors beneath them, thus earn the most money without even needing to purchase more products to sell.

Multi-Level Marketing vs. Pyramid Schemes: What’s the Difference?

Though sometimes questionable, multi-level marketing programs are legal. Pyramid schemes, however, are illegal types of money scams. Unfortunately, many pyramid schemes disguise themselves as legitimate MLMs. Here are key differences:

•   Pyramid schemes are more focused on recruiting than actually selling the products. While MLMs do ask you to recruit more distributors, the focus is on sales.

•   Pyramid schemes may also require distributors to buy more products at regular intervals, even if they have not sold all the products they already have. Sometimes, in a pyramid scheme, you have to buy more products just to get paid or earn a bonus. This is a major red flag.

In the end, most people who are swindled into pyramid schemes run out of money, are stuck with products that they can’t sell, and quit — meaning they lose everything they invested in the business.

Recommended: Are You Bad With Money? Here’s How to Get Better

Real-Life Examples of Multi-Level Marketing Companies

Some products marketed and sold through network marketing companies are from legitimate MLM businesses — and you can feel comfortable purchasing them. In other cases, recognizable products can emerge from pyramid schemes.

Here are some real-life examples of legal, established MLMs. You may be surprised to learn that what is an MLM can be a familiar and trusted brand:

•   Amway

•   Avon

•   Herbalife

•   Vorwerk

•   Mary Kay

•   Infinitus

•   Perfect

•   Quanjian

•   Natura

•   Tupperware

•   Nu Skin

•   Primerica.

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Why Is Multi-Level Marketing Legal?

Multi-level marketing businesses must adhere to strict FTC guidelines to be considered legal. The FTC regularly goes after suspicious MLM companies that may actually be pyramid schemes.

Though sometimes seemingly predatory, MLM is just a form of direct sales. When adhering to FTC guidelines, these businesses aren’t breaking any laws.

Recommended: What’s a Pump-and-Dump Scheme?

What Is the 70% Rule?

Though not technically a law, the 70% rule is a common term in MLM discussions. It arose in a 1979 case against Amway.

In analyzing the business structure of Amway, the FTC determined that, because Amway required distributors to sell at least 70% of the products they bought in a given month to earn a bonus, Amway was attempting to operate as a legitimate MLM. Their business model involved profited from sales, not shady recruiting tactics.

Now, the 70% rule is a loose term that means an MLM is focused on sales, rather than requiring distributors to buy more products or recruit more people to earn bonuses. The trouble with this rule is that it is difficult to enforce: MLMs typically trust their distributors to tell the truth about how much product they’ve sold but cannot always verify the numbers.

Are the Products That MLMs Sell Legitimate?

The products and services that MLMs and even pyramid schemes sell can be completely legitimate. Just think of that trusty Tupperware in your kitchen cabinet or your favorite lipstick from Mary Kay.

But even if a product is good, the distributor requirements of a legitimate MLM or shady pyramid scheme can still cause the seller to lose money.

Recommended: A Guide to Credit Card Protection

Can You Create Financial Freedom by Joining an MLM?

Multi-level marketing companies require a lot of entrepreneurial hustle from distributors to make money. As contracted sellers, distributors don’t earn a salary but instead make commissions.

While someone with a true sales spirit may make some money in an MLM, most do not make enough money to achieve any kind of financial freedom without another source of income. In fact, the FTC says some people even lose money from legitimate MLMs.

Pyramid schemes are worse, having left some people in economic ruin.

Tips for Recognizing Predatory MLMs and Pyramid Schemes

While MLMs are legitimate, they may not be worth the effort and could also cause you to lose money. Illegal pyramid schemes, however, are usually designed to hurt the low-level distributor.

So how can you spot a predatory MLM or pyramid scheme? Here are a few warning signs:

•   Hyperbolic claims of excess income: If a brand promoter is promising outlandish amounts of income — even saying you can quit your day job and retire early — that’s typically a red flag.

•   “Act fast” pressure: You should be able to think about any financial decision and be given the time to talk it over with friends and family. Brand promoters of pyramid schemes and predatory MLMs may use high-pressure tactics, like telling you that you must act now or you’ll lose out on the opportunity.

•   An emphasis on recruiting: In a true MLM where you at least have the potential to earn money, the emphasis should be on sales. If during initial conversations with a promoter, the emphasis is on recruiting other members, this is likely an indicator of a pyramid scheme.

Recommended: How to Verify a Check

Tips for Avoiding Predatory MLMs and Pyramid Schemes

The first step to avoiding a shady MLM or full-on pyramid scheme and protecting your finances is recognizing them when you see them.

Here’s what you can distinguish what are MLMs from pyramid schemes and avoid the latter:

•   Researching the company: Take the time to conduct research online. The FTC recommends googling the name of the company with terms like “scam” or “complaint” and then analyzing the results. The FTC even suggests reaching out to your state attorney general to inquire about complaints for a specific company. Uncovering evidence of lawsuits during your research is often a tell-tale sign.

•   Analyzing the products: Legitimate MLMs can sell good products. Pyramid schemes might even have products that you recognize. But if any company has poor-quality products that they expect you to sell, there’s a good chance it’s a pyramid scheme. Watch for products that are priced too high, claim to have “miracle” ingredients, or “guarantee” results.

•   Asking good questions: If the promoter is unwilling to answer very basic questions, like how refunds work or what happens if you can’t sell the product, they are likely hiding something.

•   Not making decisions in a vacuum: It’s a good idea to discuss all major financial and business decisions with a trusted friend or family member. If you have paperwork for an MLM that you’re unsure about, you can even have a personal accountant or lawyer review it before you sign.

Recommended: Jobs That Pay for Your College Degree

The Takeaway

Multi-level marketing companies are legitimate and legal direct-sales businesses, but they rarely enable a distributor to make good money; some distributors may even lose money. Pyramid schemes are typically disguised as MLMs and can lead to financial ruin. Such schemes are illegal. In general, it’s a good idea to avoid any kind of MLM company if you are unsure of their trustworthiness.

Looking for other ways to grow your finances? Open an online banking account with SoFi to take advantage of our super competitive APY and the fact that we don’t charge account fees, which can help your money grow faster.

FAQ

Is it legal to join an MLM?

Yes, it is legal to join an MLM. However, very few people earn enough money from multi-level marketing companies to make them worth the effort. In fact, some people lose money in MLMs.

What makes an MLM illegal?

MLMs are legal, but pyramid schemes are not. Pyramid schemes often disguise themselves as legitimate MLMs. However, with pyramid schemes, the emphasis is on recruiting new members and forcing distributors to buy more products, rather than focusing on empowering distributors to successfully sell to customers.

Are MLMs the same as pyramid schemes?

No, MLMs are not the same as pyramid schemes, but pyramid schemes often disguise themselves as MLMs. Multi-level marketing companies are legitimate businesses that require distributors to buy products and earn commissions by selling them to a network of peers. Pyramid schemes are more focused on recruiting new distributors and forcing them to buy products than empowering distributors to sell the products.

Photo credit: iStock/Makhbubakhon Ismatova

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

SOBK0822005

When your home energy usage peaks in the summer and winter, you could be surprised by a higher energy bill — and might have to scramble to cover the cost. Signing up for budget billing with your utility providers can eliminate these unexpected cost surges and make it easier for you to plan your monthly expenses.

But what exactly does budget billing mean, and is it right for everyone? Here, you’ll learn:

•   What is budget billing?

•   How does budget billing work on a monthly basis?

•   What are the pros and cons of budget billing?

•   Does budget billing save you money?

•   Can you start budget billing on your own, without the utility provider’s help?

What Is Budget Billing?

Budget billing is an alternative, optional payment program for utilities like gas and electric. By opting into budget billing, you will pay the same predictable amount each billing cycle, regardless of how much or how little energy you actually used.

With budget billing, you can avoid the roller coaster-like highs and lows of utility billing — where costs skyrocket during sweltering summers and frigid winters. For many, this makes building a monthly budget much easier.

To opt into budget billing, call your utility provider or check out the website for information about what is available.

Recommended: How to Organize Your Bills

How Does Budget Billing Work?

Energy prices and usage fluctuate throughout the year. This can make it difficult to anticipate what your gas and electric bills will be each month. Depending on where you live and how harsh the seasons are, you might be in for a surprise on a few bills each year.

Budget billing eliminates those bill fluctuations. Instead, your utility provider analyzes past energy usage for your residence (usually over the prior 12 or 24 months) to estimate an annual total. The company then divides that total into 12 identical payments for the upcoming year.

Of course, it’s unlikely that your energy consumption will be exactly the same as it was the previous year. And with increased inflation and unpredictable weather events, the price of electricity and natural gas could increase over time. To account for this, your utility provider will track your actual energy usage throughout the year and calculate what you would owe (sometimes called a “true-up amount”).

•   If you overpaid for the year, the provider will issue you a credit on an upcoming bill.

•   If you underpaid for the year, you’ll have to pay the outstanding balance.

Either way, the utility provider will use this year’s worth of data to calculate a new monthly payment for the year ahead.

Note: While annual plans are common for budget billing, some providers may also offer a quarterly (three-month) plan.

Recommended: Automating Your Finances

Does Budget Billing Save You Money?

Budget billing does not save money on utility bills. Instead, it just makes your monthly payments more predictable. Some months, you will likely pay less than what you actually owe. In others, you could be paying more than what you would owe.

Having a predictable line-item budget may make it easier for you to handle other monthly expenses or keep you from needing to dip into your emergency fund to cover an especially high energy bill.

Advantages of Budget Billing

So what are the pros of budget billing? For many families, budget billing can add some stability to their finances. Here’s how it may help you out:

Easier Budget Management

Not knowing how much you’ll owe your utility providers each month can make it tough to build a budget. With predictable bills, you’ll know how much money to set aside each month for utilities. You’ll also know how much is left for other expenses, as well as for savings and retirement contributions, debt repayments, and investments.

Less Financial Stress

If seeing an unusually high total on an email statement or paper bill can send you into a panic, you may appreciate the stability afforded by budget billing. Budget billing won’t save you money, but when you know what to expect each month, you might rest a little easier.

Reducing Late Payment Penalties

If you receive a high energy bill that you can’t afford to pay, you may have to take on unwanted credit card debt with a high interest rate, dip into emergency savings, or even just pay the bill late. The latter could result in late payment penalties.

With budget billing, you won’t have to worry about a spike in your monthly energy bills. This may help you avoid late payments altogether.

Drawbacks of Budget Billing

As helpful as budget billing can be for some families, there are also some cons to consider:

Potential Fees

Some utility providers charge a fee to enroll in budget billing. On top of the startup fee, the provider may charge ongoing fees for the service. If that’s the case, budget billing will actually cost you more money than a traditional billing program. It’s a good idea to ask about fees before signing up for any new program.

Recommended: Can You Change the Due Date of Your Bills?

Chance You Could Underpay

At the end of the program — usually a year after it kicks off — the gas or electric company will calculate what you actually owed for the year, based on your energy consumption. If you overpaid, you’ll get a credit on a future bill (nice!).

But if you didn’t pay enough each month, you’ll owe whatever remains. If it’s a sizable amount, you may have to rely on a credit card to cover other expenses or take money out of savings to pay off the bill. Many people enroll in budget billing to avoid such surprises to begin with, so this can be counter-productive.

Complacency

When you’re on a budget billing plan, you might get used to a low electric bill in the summer and be tempted to blast the AC. Similarly in the winter, it could be tempting to get all toasty by cranking up the heat. You won’t feel the financial repercussions of those decisions until much later, when your provider calculates your true-up amount and determines that you owe more money.

If you don’t think you can be responsible with energy consumption without the threat of a high bill looming over you each month, budget billing may not be the right fit for you.

Recommended: How to Pay Bills with a Credit Card

What Happens If You Are Billed Incorrectly?

Mistakes can happen. When you opt in to budget billing, it’s a good idea to read the agreement and understand how your monthly total is calculated. You want to be sure you understand how bill pay works. Even if you have your bill set to autopay, you may want to review your statement each month to ensure it’s what you expected. If it’s not, you can call your utility provider to discuss.

Recommended: Pros and Cons of Automatic Bill Payment

Can You Make Your Own Budget Billing System?

You don’t have to opt into a utility provider’s system to take advantage of budget billing. In fact, you can make your own budget billing system if you’re willing to do some math.

Just analyze what you spent on utilities over the previous 12 months to figure out an average monthly total. Use this amount when building your monthly budget.

If your first bill comes in and is less than your monthly budgeted amount, pay the bill and hang on to the leftover funds. Stash them somewhere safe, where you won’t spend them. When your bill is eventually higher than what you’ve budgeted, you can dip into that leftover money to cover the difference.

By handling budget billing yourself, you can avoid any potential fees the utility provider might have charged you. Plus, you can store leftover budgeted funds in a high-interest savings account. While this approach requires discipline, it can be well worth the effort.

Alternatives to Budget Billing

Budget billing may not be for everyone. Some alternatives include:

•   Traditional bill programs: You’ll pay what you owe each month, but that means some bills might be high in the summer and winter. In other months, you may enjoy lower-than-average bill totals.

•   DIY budget billing: If you don’t mind doing some math to figure out an average monthly payment, you may be able to do budget billing without the fees and hassle of going through a provider. You’ll still pay what you owe each month, but by planning ahead and setting money aside in savings, you can make a more predictable budget.

•   Low Income Home Energy Assistance Program (LIHEAP): Depending on your income level, you may qualify for government assistance with your home energy bills. Qualifying for the program does not guarantee assistance; roughly 20% of households that qualify actually receive help through LIHEAP.

Recommended: What to Do If You’re Bad With Money

The Takeaway

Budget billing allows utility customers to pay a set amount each month for electricity and gas, based on past usage patterns. You won’t save any money with budget billing, but it can make monthly budgeting more predictable. Before enrolling in a budget billing program, it’s a good idea to review the pros and cons and understand how it can affect your finances each year.

3 Money Tips

1.    Typically, checking accounts don’t earn interest. However, some accounts will pay you a bit and help your money grow. Online banks are more likely than brick-and-mortar banks to offer you the best rates.

2.    An emergency fund or rainy day fund is an important financial safety net. Aim to have at least three to six months’ worth of basic living expenses saved in case you get a major unexpected bill or lose income.

3.    If you’re faced with debt and wondering which kind to pay off first, it can be smart to prioritize high-interest debt first. For many people, this means their credit card debt; rates have recently been climbing into the double-digit range, so try to eliminate that ASAP.

FAQ

Do all utility companies offer budget billing?

Not every utility company offers budget billing. Your state may have a network of regulated electric and gas providers that are required to offer this program, but unregulated suppliers may not offer budget billing.

Am I better off budget billing or not?

Budget billing can be helpful if you like a predictable utility bill each month. Knowing what you’ll spend may make it easier to budget for other expenses. However, budget billing does have its drawbacks, especially if the utility provider charges a fee for the service.

Can I budget bill for other areas of my budget besides utilities?

Outside of utilities, most recurring monthly bills are predictable — rent or mortgage, internet, phone, student loan payments, etc. But if you like the predictability offered by budget billing for utilities, you might benefit from creating your own budget billing program for other unpredictable monthly totals, like groceries and fuel for your car. To do so, just calculate your expenses from the last year and divide by 12 to determine your average monthly total. You may want to account for inflation when estimating expenses like food and gas.

Photo credit: iStock/Milan_Jovic

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SOBK0822019

Wire transfer fees can make sending money to friends, family, and businesses quick and secure, as well as expensive. With fees ranging between $25 and $30 for outgoing domestic transfers and $45 and $50 for outgoing international transfers, it can be a good idea to find ways to reduce your costs.

Here, you’ll learn how to lower or possibly avoid wire transfer fees. Read on for answers to:

•   What are wire transfer fees?

•   Why are wire transfer fees necessary?

•   How much are wire transfer fees?

•   How can you lower wire transfer fees or eliminate them altogether?

What Is a Wire Transfer?

A wire transfer is a method for electronically sending money from one bank account to another. Wire transfers are relatively safe and fast — and they’re a convenient way to send money internationally. Consumers can use banks, credit unions, and specific money transfer providers like Western Union and MoneyGram to wire money.

Worth noting: You may also see a wire transfer called a “remittance transfer.” Per federal regulations, a “remittance transfer” specifically refers to an international wire transfer.

To send a wire transfer, you’ll need to know the recipient’s full name and bank account information, such as account and routing numbers. It’s important to get that info correct; once you initiate the transaction, it’s nearly impossible to reverse a wire transfer.

Domestic wire transfers can happen in a matter of hours. If wiring money internationally, it may take a few days for the recipient to receive their funds (in their own currency).

Why Would You Use a Wire Transfer?

There are a few common reasons you might need to use a wire transfer as opposed to other payment methods, like peer-to-peer (P2P) payment apps or paper checks:

•   Large transactions: Wire transfers allow you to send large amounts of money. If you’re making a large business deal or buying a house, wire transfers are an effective way of sending the necessary payment.

•   Overseas transactions: Wire transfers offer a safe method for sending money internationally. As part of the service, the money will automatically be converted to the recipient’s currency (though you’ll be charged for this). Migrants commonly use wire transfers to send money back home to their families.

•   Fast transactions: Wire transfers are fast, especially domestically. Depending on the timing, the recipient may have access to the funds the same day you send the money. If there’s an emergency and the recipient needs money as soon as possible, wire transfers may be the best option, though there are additional ways to send money instantly.

How Much Is a Wire Transfer Fee?

Wire transfer fees vary by bank, credit union, and money transfer service. Both the sender and recipient may have to pay a fee, and institutions generally have separate fees for domestic and international wire transfers.

It’s always a good idea to research multiple banks, credit unions, and money transfer services to find the best rates. In general, you can expect to pay:

•   $25 to $35 for outgoing domestic transfers

•   $45 to $50 for outgoing international transfers

•   $15 to $20 for incoming transfers

Some banks and credit unions may offer discounts or waive fees entirely for customers with specific accounts.

Note: You might pay additional fees for using a debit or credit card and for a foreign currency exchange.

When Do I Get Charged a Wire Transfer Fee?

Sometimes, both the sender of funds and the recipient have to pay fees for the wire transfer. It depends on which bank, credit union, or money transfer you choose.

While both parties may have to pay fees, it’s more likely that the sender will pay — and that the fee will be higher for them than for the recipient.

The sender will pay the fee to initiate the transaction. Before the recipient can claim their money, they will have to pay their own fee, if applicable.

Recommended: What Are Transaction Deposits?

Tips to Avoid Paying Wire Transfer Fees

Wondering how to avoid wire transfer fees? We’ve put together a handful of tips to cut costs when sending and receiving money. Consider:

•   Sending through your own financial institution. Many banks and credit unions offer discounts or even waive wire transfer fees for customers. Eligibility may depend on the type of account you have with an institution, but it’s always worth researching what kind of discount you can get through your own bank.

•   Sending to a student account. Parents of students studying out of state or even abroad may get hit with outgoing and incoming wire transfer fees when sending money to their kids. As a benefit to parents, some banks may waive the incoming wire transfer fees if the money is sent to a student account. Outgoing fees will still apply.

•   Conducting the wire transfer online. You can initiate a wire transfer in person or over the phone, but it may actually be cheaper to do it online. Check to see if any banks, credit unions, and transfer services offer a discount for online transfers. In this way, saving money can be a benefit of electronic banking.

•   Converting to the proper currency before sending. When sending money internationally, the money transfer service can coordinate the foreign currency exchange for you — but you’ll pay a high fee for this. It may be cheaper for you to convert your money into the recipient’s currency before initiating the transfer. That can be another way to avoid international wire transfer fees or at least minimize them.

•   Using another service entirely. The best way to avoid wire transfer fees? Don’t wire money! While wire transfers are sometimes the best or the only option, it’s worth exploring if there are other ways to transfer funds. For example, bank-to-bank transfers (ACH transfers) may be free, though they can take a few days. P2P payments through Zelle, apps like Venmo and Cash App, or your bank’s own platform may also be free. Sending a paper check just costs you a stamp, though mailing checks is less safe than the other options here — checks can be lost or stolen.

   A safer alternative is a cashier’s check, though these typically carry a fee; like paper checks, these are not as fast as wire transfers.

Recommended: ACH vs. Electronic Transfer

How to Stay Safe When Making Wire Transfers

Wire transfers are a fast and convenient way to send money — and they can be safe when you take the right precautions. Here’s how to stay safe when wiring money:

•   Only transferring to people and businesses you trust. Because wire transfers are difficult to reverse once initiated, scammers commonly use wire transfers as a way to swindle you out of money. It’s a good idea to educate yourself on common money scams and only wire money to people and businesses you know.

•   Confirming the info is correct: Reversing a wire transfer is difficult and typically impossible if the recipient bank has accepted the money. It’s crucial to ensure all the info is correct before initiating the transfer, including the dollar amount, the recipient’s name, and the recipient’s bank account and routing number.

Recommended: How Much Do ACH Payments Cost?

The Takeaway

Wire transfers make it easy to quickly send money to friends and family here in the U.S. and abroad. However, wire transfer fees can add up. If you’re regularly sending money via wire transfer, it’s a good idea to research ways to reduce (or waive) the fees and consider alternatives to wire transfers.

3 Money Tips

1. Typically, checking accounts don’t earn interest. However, some accounts do, and online banks are more likely than brick-and-mortar banks to offer you the best rates.
2. When you overdraft your checking account, you’ll likely pay a non-sufficient fund fee of, say, $35. Look into linking a savings account to your checking account as a backup to avoid that, or shop around for a bank that doesn’t charge you for overdrafting.
3. If you’re faced with debt and wondering which kind to pay off first, it can be smart to prioritize high-interest debt first. For many people, this means their credit card debt; rates have recently been climbing into the double-digit range, so try to eliminate that ASAP.

FAQ

Can a bank waive a wire transfer fee?

Some banks may waive incoming and even outgoing domestic wire transfer fees for customers with specific (usually premium) accounts. Before initiating a wire transfer, it’s a good idea to see if your bank or credit union offers discounts or will waive wire transfer fees, assuming your account is in good standing.

What’s the cheapest way to wire money?

If you’re sending money to someone in the U.S., it may be cheaper to use the peer-to-peer payment system built into your mobile banking app or a P2P app like Venmo or Cash App. When linked to your bank account, such transfers can be free (as long as you don’t ask for an instant transfer).

If a wire transfer is your only option for sending money, it’s helpful to compare multiple services. Also see if you can get a discount (or have the fees waived) by going through your own financial institution. This may be a good option for avoiding international wire transfer fees.

Do wire transfer fees increase when the amount is higher?

While banks, credit unions, and money wiring services may list their wire transfer fees as a flat amount, there may be associated fees that can vary depending on how much you wire. For example, money wiring services may charge a percentage of the amount you’re transferring if you choose to do so via credit or debit card. Foreign transfers may also include a margin on the exchange rate, which increases your costs when you send more money.

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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