What is ACH credit?

Adam Rozsa
21.10.21
3 minute read

If you’ve heard of ACH payments, you might have come across ACH credits and ACH debits. While these are both ACH transfers, they are quite different. In an ACH credit payment, the payer will initiate the payment - pushing the funds into the recipient account.

ACH debits work the other way around. With an ACH debit, the recipient will be authorized to pull the funds from the account automatically when a payment is due.

For this reason, you might hear of ACH credits being called push payments, and ACH debits being described as pull payments.

This guide will focus on ACH credit payments, which are often used for recurring bill payment. If you want to learn more, you can also get a full guide to ACH transactions here. To make your life easier and cheaper when sending or receiving international transfers, we’ll also introduce Wise and the 6x cheaper Wise multi-currency account. More on that later.

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How does ACH Credit work?

ACH credit payments are set up by the payer, and handy for paying recurring bills or other repeat transfers which are always the same value. You might use an ACH credit to pay a subscription on the same day every month, for example, or to make a recurring transfer to your housemate for your share of the rent.

To set up an ACH credit, you’ll need to make arrangements via your own bank or credit union. Different financial institutions have their own processes, but the steps you’ll take are usually similar:

  • Check with your own bank whether you can set up an ACH credit online - in some cases you may need to visit a branch to get started
  • Complete your bank’s ACH credit instruction form online or in hard copy - you’ll need to give recipient details, payment amount and frequency
  • Once the ACH credit has been processed by your bank, your money will be sent automatically from your bank account to your recipient according to your instructions

Once you have set up your ACH credit, you shouldn’t need to do anything more unless you want to alter or cancel it. Just make sure there’s enough money in your account to cover the cost on the payment date, and it’ll all happen automatically.

ach credit

Fees for ACH credit

ACH transaction fees are usually low - but some banks and credit unions do still charge a fee when you arrange a payment. Here’s a rundown of some common outgoing ACH payment fees by bank:

BankFees for outgoing ACH payment
Bank of America¹$3 ($10 for next-day delivery)
Chase$0
TD Bank³$0 (fees may apply for rush payment services)
US Bank⁴$3
Wells Fargo⁵$0

ACH Transfers: Pros & Cons

ACH transfers aren’t the only way to arrange electronic payments. Let’s take a look at some of the ACH pros and cons to consider when you’re deciding if an ACH credit is right for you.

Pros

Electronic transfers are easy to set up and don’t usually require any further action once initiated

ACH transfers are safe - the payment can’t be lost along the way like with a check

The fees for ACH transfers are typically either very low or free, making this a popular choice for all sorts of personal and business payments

Cons

With ACH credits, you can’t easily change the date or amount to be paid, making this payment type less suited to variable bill payments

Processes for setting up ACH transfers are set by individual banks and credit unions - in come cases you may need to visit a branch to get started

Consumer protections vary depending on the type of ACH transfer you set up - check the details before you decide

Meet Wise - Low-cost transfers with the world’s most international account

Making electronic payments is part of everyday life for many of us - and that can include sending money to friends, family and businesses based overseas. If you’re making an international transfer, you could be better off with Wise.

Wise international transfers use the real exchange rate every time, with low, transparent fees, so you’ll always know exactly what your payment is costing you. Even better, the Wise multi-currency account can be up to 6x cheaper than sending money abroad with your regular bank.

Open a Wise account online for free to hold 50+ currencies, get a linked debit card to spend in 200 countries, and your own local receiving account details to get paid for free from 30 different countries, too. You can manage your money online or in the Wise app, set up multi-currency direct debits, and hold, send and spend globally for less.

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Sources:

1]Bank of America - online banking service agreement
2]Chase - digital transfer
3]TD Bank - service fees
4]US Bank - fee guide
5]Wells Fargo - banking fee schedule

All sources checked on 21 October 2021


This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.

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