Fast Financial Facts: What is ACH Anyway?

LendUp’s Fast Financial Facts are a way to help consumers navigate their finances. In just a few minutes, you may learn something new about how to get the most out of your finances. Links to any related videos are included.

Today we’re sharing some tips that may be useful if you’re wondering about how ACH transactions are processed.

What does ACH mean? ACH stands for Automated Clearing House, which is the oldest and most trusted way to send funds. ACH transactions are processed in groups and may be either credits (money in) or debits (money out). If you receive direct deposit into a checking account, or have automatic payments set up for your bills, they may use the ACH network. If you’re using the ACH network for a payment, it could lead to a return code if there are insufficient funds or issues with your bank account. Here’s a quick video with more.

For a LendUp customer: When applying for a LendUp loan, you will want to include your electronic or paper routing number. This is not a wire transfer routing number. If approved, and you select the Next Day Funding option, your money will be sent through the ACH network. If you finalize your request before 5 p.m. PT on a business day, it will be sent to the bank with instructions for the transaction to process on the next business day. Choosing the Next Day Funding option also means your payment will be automatically withdrawn from your bank account on your due date. The exact time, however, is up to your bank. Watch this video to learn more about how long it takes for your ACH payment to clear your account.

Is ACH used for a wire transfer? No. A wire transfer is not sent through the ACH network. A wire transfer can also be a bank-to-bank transfer (using a separate routing number) or made with cash at a storefront. If you’ve ever known someone who has brought cash to the store to send to a family member abroad, this is a type of wire transfer often called a “remittance.” A wire transfer is normally sent as an individual transaction, so it may arrive more quickly, but it is usually more expensive.

For a LendUp customer: LendUp does not accept wire transfer routing numbers, nor do we send money via wire transfers.

If you’re sending money to a friend or making a payment, consider the potential costs of an ACH versus a wire transfer. An ACH transfer is typically free (for payments or transferring funds within the same bank). A wire transfer could end up costing you a lot more.

Share this post with your friends to show off your financial savvy! Or, if you have a question or fact that you’d like us to research, please let us know by sending an email to education(at)lendup.com.

Disclaimer: LendUp is not providing financial, legal or tax advice. If you need or want such advice, please consult a qualified advisor.

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