ACH Transfer

ACH (Automated Clearing House) is the electronic network that processes most bank-to-bank transfers in the United States. When your employer direct deposits your paycheck, when you pay bills online, or when you transfer money between bank accounts, these transactions typically flow through the ACH network.

ACH processes over 30 billion transactions annually, moving trillions of dollars. There are two types: ACH credits (pushing money to another account, like direct deposit) and ACH debits (pulling money from another account, like automatic bill payments). Both are initiated by the sender's bank and processed in batches.

Traditional ACH transfers take 1-3 business days to complete, though same-day ACH (introduced in 2016) enables faster processing for a small additional fee. The lag is due to batch processing — ACH transactions are collected and processed in batches several times per day, rather than in real time.

ACH transfers are typically free or very cheap (under $3) for consumers. This makes them ideal for regular transfers like moving money to savings, paying rent, or funding investment accounts. Compared to wire transfers ($15-$50), ACH is the cost-effective choice for non-urgent transfers.

For financial tracking, ACH transfers can sometimes be confusing because the descriptions on bank statements are often generic (e.g., "ACH DEBIT" or "ACH CREDIT") without clear merchant names. Good transaction categorization software can parse the additional data in ACH records to identify the counterparty.