How to Transfer Money Between Banks in Canada

Transferring money between banks in Canada is a common financial activity, whether you are moving funds to another account of your own, sending money to a family member, or making payments.

With advancements in digital banking, there are several methods available to transfer money securely and efficiently.

This article explores the different ways to transfer money between banks in Canada, outlining the steps, fees, and potential benefits of each method.

1. Interac e-Transfer: The Most Popular Method

Interac e-Transfer is one of the most widely used methods for transferring money between banks in Canada. It allows you to send and receive money quickly using just an email address or mobile phone number.

Most major Canadian banks and credit unions support Interac e-Transfer, making it a convenient option for many users.

To initiate an Interac e-Transfer, log in to your online banking or mobile banking app and select the option to send money via Interac e-Transfer.

You will need to provide the recipient’s email address or phone number, the amount you wish to transfer, and a security question that the recipient must answer to claim the funds.

Once the transfer is complete, the recipient will receive an email or text message with instructions on how to deposit the money into their account.

Interac e-Transfer is known for its speed, with most transactions being completed within minutes. However, there may be fees associated with using this service, depending on your bank and the type of account you hold.

Some banks offer free Interac e-Transfers as part of their account packages, while others may charge a small fee per transaction, typically ranging from $1 to $1.50.

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2. Bank-to-Bank Transfers: Moving Funds Between Your Own Accounts

If you have accounts at multiple banks and need to transfer money between them, most banks offer a bank-to-bank transfer service.

This service allows you to link your accounts from different financial institutions and move money between them without having to write a cheque or use cash.

To set up a bank-to-bank transfer, you will typically need to provide your bank with the account information for the external account you wish to link.

This process may require you to verify ownership of the external account by providing a voided cheque or by confirming small test deposits. Once the accounts are linked, you can transfer money between them online or through your bank’s mobile app.

Bank-to-bank transfers are generally free, but they may take a few days to process, especially if the transfer is between different banks.

It’s important to check with your bank for any specific requirements or limitations, such as daily transfer limits or cut-off times for processing transfers.

3. Wire Transfers: For Large or International Transactions

Wire transfers are a secure and reliable method for sending large sums of money, either domestically or internationally.

They are often used for significant transactions, such as real estate purchases, business payments, or sending money to family members abroad.

To initiate a wire transfer, you will need to visit your bank in person or use their online banking platform if they offer this service online.

You will be required to provide detailed information about the recipient’s bank, including the bank’s name, address, SWIFT/BIC code (for international transfers), and the recipient’s account number.

Some banks may also require additional information, such as the purpose of the transfer.

Wire transfers are usually completed within a few business days, but they can be expensive. Fees for domestic wire transfers typically range from $10 to $50, while international wire transfer fees can be significantly higher, often ranging from $30 to $80 or more.

Additionally, the receiving bank may also charge a fee, so it’s important to consider these costs when planning a wire transfer.

4. Pre-Authorized Debits and Credits: Automated Transfers

Pre-authorized debits (PADs) and pre-authorized credits are automated methods for transferring money between accounts on a regular basis.

PADs are often used for recurring payments, such as mortgage payments, utility bills, or subscriptions, where you authorize a company or financial institution to withdraw money from your account automatically.

Pre-authorized credits, on the other hand, are commonly used for payroll deposits, where your employer deposits your salary directly into your bank account.

To set up a PAD or pre-authorized credit, you will need to provide the relevant company or financial institution with your account information and authorize them to make automatic withdrawals or deposits.

This method is highly convenient, as it eliminates the need to manually initiate transfers each time.

While PADs and pre-authorized credits are generally free, it’s crucial to ensure you have sufficient funds in your account to cover any withdrawals.

Insufficient funds can result in overdraft fees or declined transactions, which could impact your credit score if not addressed promptly.

5. Cheques and Bank Drafts: Traditional Methods Still in Use

Despite the rise of digital banking, cheques and bank drafts remain viable options for transferring money between banks in Canada.

While these methods may be considered outdated by some, they can still be useful in certain situations, such as transferring large sums of money or when electronic methods are not available.

To transfer money using a cheque, simply write a cheque to yourself or to the recipient, and deposit it into the desired account.

This method is straightforward but can take several days to process, depending on the banks involved.

Bank drafts, also known as cashier’s cheques, are another secure option for transferring money. A bank draft is a guaranteed payment issued by your bank, and it can be deposited into another bank account just like a cheque.

Bank drafts are often used for larger transactions, as they provide a higher level of security compared to personal cheques. However, there is usually a fee associated with obtaining a bank draft, typically ranging from $7 to $10.

Conclusion: Choosing the Right Transfer Method

Transferring money between banks in Canada is a straightforward process, with multiple options available to suit different needs.

Whether you prefer the speed of Interac e-Transfers, the reliability of wire transfers, or the automation of pre-authorized debits, it’s essential to choose the method that best meets your requirements and budget.

Before initiating any transfer, it’s advisable to check with your bank for specific details about fees, processing times, and any potential limitations.

By understanding the options available and planning your transfers accordingly, you can ensure that your money moves smoothly and securely between accounts, no matter where it needs to go.

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