How common are EFT transfer fees?

hank

A large Michigan C.U. with which I have a checking account sent out fee updates recently. I phoned to confirm I understood correctly. It seems that outbound EFT transfers to a different institution will now cost $20 per. Incoming transfers are still free. Doesn’t affect me. I do, however, make automatic monthly EFTtransfers from one area bank into a cash account at TRP - mainly to help with budget planning over the year (and have incurred no fees).

It occurs to me that a younger investor seeking to build some wealth at a fund house with monthly $50 or $100 investments (commonly called “automatic investment plans”) would be deterred from doing so if this practice became widespread. For him or her, even $20 per would really ding their anticipated growth on those funds. Does it really cost the institution that much to perform EFT transfers?

msf

Do you mean ETF or EFT? An ETF trasnfer would be an ACAT securites transfer; an EFT would be an ACH transfer of cash. Usually banks don't charge for ACH transfers.
https://www.nerdwallet.com/blog/banking/ach-transfers-costs-send-money-banks-online/

You may be able to avoid an ACH fee by initiating the transfer from the receiving side.

I had a BofA eChecking account (used only to get bonus cash back on their credit card) that charged to initiate outgoing ACH transfers. But BofA was happy to spend the money to print a check and mail it to me for free. Go figure. That's how I dealt with getting the cash transferred to another institution.

Most institutions charge for ACAT transfers of securities. Here's a current table showing how much various brokers charge for partial or full transfers:
https://topratedfirms.com/brokers/fees/brokerage-account-transfer-fees.aspx

The only general exception I'm aware of (assuming this is still the case) is that mutual fund distributors don't charge to transfer shares out. That is, if you buy shares directly from a fund (e.g. because the fund is closed to purchases through third parties), you can usually transfer those shares for free to where you want them held.

hank

Apologies. My feeble brain often scrambles letters. Hope I’ve corrected all the typos in OP. Umm ... Here’s the language from the letter:

“ACH/External Account Transfer (Online Banking)
New ACH Origination or Change to Existing Origination ..... $20 per item”

I’ll say that the lady I spoke with on their (unusually busy) phone line this morning didn’t seem to understand it much better than I did. However, I did toss out a hypothetical transfer of assets via EFT into T. Rowe Price from the credit union. And she answered that “yes” it would result in a $ 20 charge.

Now, I was under the impression that all EFTS (electronic fund transfers) went through the ACH (automatic clearing house). Was that impression incorrect?

As I mentioned, my biggest concern would be if the AIP plans were killed over this, as I know having one 25 years ago taught me a lot about investing and helped me develop some good money management habits. A great help to some.
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PS - Thanks for the tip @msf. I always initiate EFTs (outgoing and incoming) with T Rowe - not with the local institution. T Rowe has never charged for the service (but does charge if you elect to wire money). Maybe that’s what has led to my confusion.

carew388

I always initiate outgoing EFTs from Schwab or Fidelity, but never initiate outgoing EFTs from local banking institutions-too many chances for hidden/unexpected fees!

msf

hank said:

Now, I was under the impression that all EFTS (electronic fund transfers) went through the ACH (automatic clearing house). Was that impression incorrect?

...

PS - Thanks for the tip @msf. I always initiate EFTs (outgoing and incoming) with T Rowe - not with the local institution. T Rowe has never charged for the service (but does charge if you elect to wire money). Maybe that’s what has led to my confusion.

EFT means different things to different people. Here's a pretty decent article on this. As in the article, I tend to think of EFT broadly. But from the way you used the term, it was pretty clear that you meant an ACH transfer.

Folks in the corporate finance world all know what they mean they say “EFT” or “EDI.” But here in the banking world, we think of “EFT” as a general term that covers any method of transferring funds electronically from one bank account to another (e.g., ACH, wire, credit card, debit card, other digital/virtual currency). “ACH” in our world specifically means the “ACH Network” – the U.S. electronic payment network that features Direct Deposit and facilitates 20+ billion consumer, business and government transactions worth $40+ trillion dollars annually, and is backed by the NACHA Operating Rules.

Call it EFT or ACH or EDI – But They’re Different and It Matters
http://go.nacha.org/elevation/blog/call-it-eft-or-ach-but-theyre-different-and-it-matters

The $20 fee sounds very high for an ACH transfer, but in the right ballpark for a wire transfer. Either of which could be considered by some to be an electronic funds transfer, as the article notes.

Regardless, it's worth checking to make sure that when TRP pulls the money, you won't get charged for it. (I don't expect there to be a charge - this should be equivalent to a utility pulling monthly payments from your checking account.)

BenWP

BOA, where I have checking, calls transfers to accounts at other banks ACH Transfers. The current fees are $3 for 3 business days, $10 for next business day, and $30 for a wire transfer, same day. BOA does not charge if you transfer to another person's account at BOA. I have been using the free transfer services at Schwab and TDA when I need to do this. BOA does not charge a fee for my payments to credit card accounts. I have no experience with automatic investing plans.

catch22

We've moved, for many years between c.u. and Fidelity accountsl, both directions = no fees.

Fidelity guidelines