Moving Money in the US

This is the first (and universal) method that a person uses. As kids we got paid with cash for doing chores or allowances, gifts were usually cash, and even the tooth fairy paid us cash. It’s easy and there is nothing more to be done than hand it to another person.

Pros:

It’s Fast and It’s Free – There is no account needed – so no password, no Internet access needed, and it’s anonymous.

No Special Knowledge – Only basic math is needed.

Widely Accepted – It is accepted nation-wide and sometimes internationally.

Cons:

It’s Physical – You must be physically present (or have someone help you) for the transaction to happen. it can get bulky or heavy.

You are Responsible for Security – If your cash is lost or stolen, it’s gone!

Fraud Potential – If you don’t spot and reject a counterfeit bill before you accept it, you are out that amount of money.

Bills & Coins – Change must be made or given back.

Transaction Limits – Transaction over $10,000 in a 24-hour period are required to be reported. The $10,000 limit also applies to crossing international borders – you can cross with more; it just needs to be claimed.

This is the way banking has been carried out for hundreds of years. In-person banking is the best (sometimes only!) way to do some financial transactions or handle certain situations.

In-person banking is often the best (or only) way to handle complex transactions, get advice, open bank accounts, or getting a loan.

Large transactions must be completed in the bank since there are limits to online transactions.

With Bill Pay you can pay bills right at the bank.

Direct Deposit is the most convenient way to get paid. It’s fast and doesn’t require a trip to the bank after it is set up. (This can be done online as well.)

Pros:

Personalized Service – You get personalized service by speaking directly to a banker. They can give you tailored advice, resolve financial issues, and help with financial planning.

Problem Resolution – They can often resolve problems such as disputes, account freezes, or fraud alerts right on the spot.

Access to More Services – Some things like large deposits or withdrawals, foreign currency exchange, certified checks, and wire transfers must be done in-person. You can also have access to safety deposit boxes in the bank itself.

Trust – There is a certain trust and security with conducting banking transactions inside the bank. You can also build relationships with bankers, and they can sometimes help you get financial things done that are not possible without that relationship.

Cons:

Limited Hours – Banks have limited hours, and there can be wait times, which are not convenient. You also must physically go to the bank, and if there isn’t a branch where you are, you are out of luck.

Fees – Banks can charge fees for doing transactions in the bank instead of online.

Online banking is the focal point of a person’s finances in the 2020’s. With online banking we can transfer money from one account of ours to another. We can even set up an external account so we can transfer money from one bank to another that we bank with.

I am including phone and ATM use with online banking. A common way to access online banking is with the bank’s smart phone app. Every bank has one. Besides transferring money from one account to another, we can also pay bills with our online banking.

As far as using a phone, the most common reason to call the bank is to contact customer support. Telebanking is a possibility with some banks. This is where you can call the bank’s automated system for balance inquiries, transfers, or bill payments. Bank clients who do a lot of business with a bank may even have a direct line to a personal banker.

Bill Pay – a convenient way to pay bills without using a credit or debit card. You can pay your bill any time of the day or night.

Direct Deposit is the most convenient way to get paid. It’s fast and doesn’t require a trip to the bank after it is set up. (This can be done in-person as well.)

Check Deposit – You can even deposit checks with your bank’s app.

Pros:

Ease – It is very convenient, fast, and it is usually free to use.

Low Fees – Online only banks (such as Ally Bank or Axos Bank) often offer lower banking fees and better savings interest rates.

Security – Online banking is secure with strong encryption and multifactor authentication. They use the same security measures that merchant credit card terminals use.

Cons:

No Cash – Cash cannot be handled with online banking.

Online Only – If you are using an online only bank, there are no physical branches where you can deal with a person face-to-face.

Computer & Internet Based – Outages or glitches can leave you locked out of your account.

Potential for Fraud – Even though there are security features in place, if a person is not careful, they could become a victim of fraud or phishing scams.

Limited Products & Support – There are less product offerings and options with online banking than there is with in-person banking.

I am separating this from online banking because it is different. An external bank account is a bank account at another bank. Some banks allow you to connect your online banking with this “external” bank account. With an external bank account, you can send money from your account at one bank (say, Wells Fargo) to your account at another bank (say, Bank of America). The accounts at BOTH banks must be in the same person’s name. Not all banks offer this feature. Another note is that it can sometimes take hours or days for the transaction to complete. The limits for these transfers are different than those of Zelle.

Pros:

Convenience – Easy way to move money between different banks, as long as you have an account at both banks.

Extend Limits – The money you transfer via external accounts do not count towards e-Transfer amounts. This way you can transfer more money during the same time frame.

Cons:

Speed – Transfers can be slow, in fact they can take 1-2 business days.

Limited Banks – Some banks do not support this type of transfer.

Used for sending money to individuals or small business / self-employed people via email or phone number. The recipient accepts the transfer manually (unless auto-deposit is enabled). Often used for peer-to-peer (think friends & family) payments, rent, small business payments, etc. Typically has lower fees than wire transfers (often free).

Pros:

Fast Transfers – The money is usually received in minutes.

No Fees – Zelle does not charge a fee for using the service.

No Third Party – The money goes directly from bank account to bank account with you having to share your banking info with the other person.

Widely Available – Most banks have Zelle built right into their apps.

Easy to Use – All you need is the other person’s email address or phone number.

Secure – It runs on the bank’s existing security.

Cons:

Instant Transfer = Instant Mistake – Sending money to the wrong person (including typo errors!) means the money is gone!

US Only – It only works with US banks and US phone numbers.

Trusted People – Zelle is designed to be used with people you trust, such as friends and family. Not recommended for buying from people you don’t know.

Scammers – They like to use Zelle since the money is non-refundable.

Enrollment Delays – There can be a delay with the first transfer.

Your debit card connects directly to your bank account (usually checking). It allows you to spend your money in stores in a convenient way. Because it allows you to spend the money from your bank account, it is limited by the amount you have in the bank. There are spending limits on the cards as well.

Pros:

No debt – you spend money that you already have!

Widely accepted form of payment.

Speed – Instant transaction time.

No or low fees for using the card. Each time you use your card, though, it counts as a transaction, so pay attention to transaction limits on your account or the fees for using more transactions.

Direct Access to Cash – both at store checkouts with purchases, and at ATMs.

Budget Friendly – they can help you not overspend.

No credit needed to use the card.

Cons:

Limited Fraud Protection – When you use a debit card, you are spending your own money. If there is fraud with your debit card, you are the one who has to try to get your money back. (That can be difficult!)

Does not build credit.

Spending limits can be restrictive. (Although this can be beneficial for youth learning about spending money.)

No Rewards.

Bank Fees – Each time you use your card it counts as a transaction. If your account has a set number of transactions per month, you can find yourself paying to use your debit card.

Overdrafts – You may be able to spend more than is in your account! This would cause an overdraft, and they are expensive, and the money must be paid back to the bank.

As a consumer, these are used in the same way that debit cards are used. The big difference is how they work. With credit cards, you have a line of credit that you spend on purchases, then you must pay that money back to the lender.

Pros:

Convenience – Accepted almost everywhere – online and worldwide.

Strong Fraud Protection – Since you are spending the lender’s money, they are the ones who go after the stolen money! Your money is still in the bank.

Builds Credit – As long as you use your card responsibly, it helps you build good credit.

Rewards & Cashback – It’s like getting everything on sale, or getting paid to spend. (Don’t be fooled, though, lenders are in business to make money from you through interest and fees.)

Insurance & Purchase Protection – Many cards offer purchase protection, extended warranties, rental car insurance, and travel insurance. Check and see what benefits your card has. Also, the item must be purchased with that card in order to be covered.

Emergencies – While a credit card is not an emergency fund, it does offer you access to money to cover a surprise expenses.

Easier to track expenses or keep expenses separated. For example, if your work reimburses you for expenses, or you have a small business.

Cons:

Risk of Debt – With a credit card it can be easy to accumulate debt that can be hard to pay back.

High Interest Rates – Any amount that is not paid off by the end of the billing cycle has interest charged on it. This interest rate is often over 20%.

Potential Fees – Some cards have annual fees, there are late fees if you don’t pay on time, and over limit fees. There can be other fees as well – check your card for all the details.

Negatively Impact Credit – If you are late, miss payments, use too much of your available credit, or apply for too many cards in a short time, you can watch your credit score go down. (BTW: credit rises slowly and falls fast!)

Enables Emotional or Impulsive Spending.

False sense of security – You can feel like you have more money than you really do.

Prepaid credit cards work like credit cards, but you have to put money on the card before you can use it.

Pros:

No Credit Required.

No Risk of Debt.

Controlled Spending.

Spending Online – as long as you have enough balance.

Convenient for gifts.

Cons:

Does not build credit.

Fees can be sneaky – There can even be a monthly fee if the balance is not used by a certain date.

Some businesses do not accept them.

No rewards or perks.

Gift cards are closely related to prepaid credit cards. The biggest difference is that they can only be used at the business that issue them.

Pros:

Easy to Give. You don’t have to guess size or color and the recipient uses the money in a way that you intended.

Flexibility for the recipient. The recipient gets to choose within the limited scope of the gift card.

Budget Control. You set the amount you spend.

Special Promotions. Some businesses offer deals (usually during the holiday season) such as a $5 bonus when you purchase a $50 gift card.

Cons:

Limited Use. The gift cards can only be used at a certain business.

Some cards have expiration dates. Bonus cards can have black-out dates as well.

Easily lost or forgotten.

No Cash Value or Refund.

Using small balances can be awkward or tricky.

Checks used to be right behind cash for usage. Now, they are not very common among consumers.

Pros:

Useful for record keeping.

Widely accepted form of payment. (More and more business do not accept checks unless they know and trust the customer.)

Can be sent in the mail.

Checks are made out for the exact amount – no change has to be given.

Post-dating – Say writing checks for rent, you could write a whole year’s worth of checks at one time with each dated for the month the rent is due.

If lost, the check can be re-issued. No money is lost.

Cons:

Checks can bounce if there are not enough funds in the bank account it is written on.

Cost – You must pay for your checks, and they count as transactions.

Easy to forge or alter.

Takes time to clear – It can take up to a week to get the money.

Not ideal for large amounts due to trust issues.

Checks that are issued by banks on behalf of the bank’s client.

Pros:

Funds Guaranteed by the Bank.

Safe for large amounts.

Hard to Fake.

Cons:

Cost a Fee.

You must visit the bank in order to get the bank draft.

Sometimes it takes a few days to clear the recipient’s bank.

If lost, it can take weeks to reissue, or the money may be permanently lost.

This is an awesome way for you to send money to trusted friends or split a bill.

Pros:

Easy to Use – Clean design, fast, & simple.

Social Features – It has a fun, social media vibe.

Free Transfers – Standard transfers are free, but they can take 1-3 days.

Instant Transfer Option – For a fee.

Growing Acceptance – Both online and in-store payments by some merchants.

Splitting Costs – Easily split bills (like restaurants) with multiple people.

Cons:

Credit Card Fees – If you pay with a credit card, you can expect a 3% fee.

Privacy – Payments are set to public by default.

Fraud Risk – Scammers like requesting money with Venmo because the payments are hard to reverse.

Business – Unless you have a business account, you could have your account frozen if you are using it for business.

Slow Transfers – Bank transfers take 1-3 business days unless you pay for instant service.

US Only.

These are a convenient way make purchases or send money to a friend. Link your bank card to your mobile wallet and you are ready to spend as long as you have your phone or smart watch with you. These are best for small everyday purchases.

Pros:

Convenience – You don’t need to have your physical wallet or bank card with you.

Speed – Transactions are just as fast as using your bank card.

Security – There are security features such as encryption and biometrics. Also, your actual bank card details are not shared with the merchant.

Track Spending – Mobile wallets log and can categorize your purchases.

Reduced Contact – all you need to do is tap to pay.

Remote Features – Your mobile wallet can often be disabled remotely if your device is lost or stolen.

Cons:

Requires a Smartphone with a Charged Battery. Dead phone = No access to your wallet!

Limited Acceptance – Not all businesses accept mobile wallet payments.

Tech Barriers – Not everyone is comfortable setting up or using mobile payments.

May still need Physical ID – If you are making an age-restricted purchase, you may need an ID or two.

Cash App is a mobile payment service that allows users to transfer money to one another using a mobile phone app. It’s especially popular among younger users and has expanded to offer additional financial services.

Pros:

Easy To Use – Simple interface with a focus on peer-to-peer payments.

Multiple Functions – Beyond money transfers, it offers banking services, a debit card (Cash Card), and stock/Bitcoin investing all in one app.

Fast Transfers – Standard transfers take 1-3 business days, but instant transfers are available for a fee.

Unique Username – Use your $Cashtag (unique username) instead of sharing personal information.

No Monthly Fees – Free to send and receive money using a linked bank account or existing Cash App balance.

Cash Boost – Cash Card offers “boosts” (discounts) at select merchants.

Direct Deposit – Can receive paychecks up to two days early.

Cons:

Credit Card Fees – 3% fee when sending money using a credit card.

Instant Transfer Fee – 1.5% fee (minimum $0.25) for instant transfers to your bank account.

Limited Customer Support – Fewer customer service options compared to traditional banks.

Account Limits – Standard accounts have sending/receiving limits until identity is verified.

Privacy Concerns – Social aspects of the app might share payment activity with contacts by default.

US-Focused – Primary functionality works best within the United States.

No Buyer Protection – Unlike PayPal, Cash App offers limited protection for purchases from unknown sellers.

An online payment platform that can be used for online purchases. Also, freelancers and self-employed people can get paid with PayPal and create invoices. PayPal can also be used for sending money internationally.

Pros:

Widely accepted online and with freelancers and self-employed people.

Added Privacy – Connect your credit card or bank account to PayPal, then you don’t have to give your bank card information online.

Sending money only requires an email address or phone number.

Cons:

Fees for Certain Transactions.

Account Freezes / Holds. Often without warning!

Poor Customer Service. There are reports of difficulties with working with PayPal customer service.

Not for In-Person – there’s no tap to pay option like with a mobile wallet.

Currency Conversion Fees.

This is a great way to send large amounts of money, securely, and quickly. This is a common way to move money for business deals, real estate, investments, or other one-time type of payments.

Pros:

Fast Delivery – Domestic is often same day, international can take 1-3 business days.

Secure for Large Amounts – The transfer goes directly from bank to bank, so there is low risk of fraud.

Irreversible – Once sent, it can’t be recalled.

No Holds – Once the money in received, it is in the recipient’s account.

Global Reach – With the SWIFT system, money can be sent to any other bank that is on the SWIFT system. Most countries use the SWIFT system.

Cons:

Expensive – Fees can range from $15 to $50. More for international transfers. There can even be fees on both ends of the wire.

Irreversible – There is no Undo Button. If the money is sent to the wrong account, it is very difficult (or impossible!) to reverse.

Full Banking Information Needed – You need the recipient’s full bank account number, SWIFT code, and address.

Only Available During Business Hours – No after hours or weekends.

Privacy Concerns – There is a lot of banking information that needs to be given to the sender. Not anonymous.

These work like bank drafts, with a few differences.

Pros:

Widely Accepted – Accepted by many businesses, landlords, & individuals across the US.

Secure & Traceable – Can be track or cancelled if lost or stolen. ID required to cash in order to reduce fraud.

No Bank Account Needed – Ideal for under-banked or unbanked people.

Low Cost – Less expensive than Western Union.

Safe Alternative to Cash – Reduces risk of theft or loss compared to mailing cash.

No Expiration – They do not expire and are refundable.

Cons:

Amount Limit – $1,000 is the maximum amount.

Physical Only – No online version, they must be mailed or delivered to the recipient.

Limited Purchase Methods – You can only use cash, debit, or traveller’s checks to purchase a money order.

Counterfeit Risk – Recipients should verify the money order with the USPS.

Requires a Trip to the Post Office – Not ideal for those looking for fast transaction time.

This is a great way for the unbanked or under-banked to send and receive money, since this operates outside the banking system. All you need to do is find a business that is a Western Union agent, and you have access to their system. You can even pay bills with Western Union.

Pros:

Convenient Locations – Many locations (often convenience stores) are open late and on weekends.

Fast Transfers – Cash can usually be picked up within minutes.

No Bank Account Needed.

Widely Available in the US.

Cons:

High Fees.

Unfavorable Exchange Rates.

Scam Risk – Often used in fraud (romance scams).

Limited Recourse – If you send the money to the wrong person, that money is gone!

Precious metals have been used as currency for ages! The most common forms of these metals are coins and bars.

Pros:

Real & Tangible – Like cash, but it is not dependent on a government, bank, or electricity.

No Expiry.

Universally Recognized.

Private & Anonymous – It can be handed from one person to another. Nothing else needed.

No Third Parties – No need for banks, government, apps or accounts.

Cons:

Bulky & Heavy.

Hard to Divide – It’s difficult to cut a gold bar or coin.

Customs & Law – Governments can make owning precious metal illegal.

Risky to Use & Carry – If it is lost or stolen, it’s gone forever!

Not every place will accept gold or silver.

Bitcoin is the most popular. There are so many different cryptocurrencies now. If you are interested in crypto, it can be a viable way to transfer money to someone else.

Pros:

Fast Transfers – Available 24/7.

Low Fees.

Privacy & Security – Transfers can be done anonymously and secured through block chain.

Borderless Transactions – Crypto can be sent to other countries as easily as sent to your neighbor.

Decentralized – There are no other parties involved. No banks or government.

Cons:

Price Volatility – The price can change during the time it takes to send it and receive it. Also, the price can change before you can use it.

Reporting & Taxes – We are required to report our crypto transactions to the IRS.

Acceptance – Not everyone accepts or is comfortable with crypto.

Security Risk – Accounts can get hacked. If this happens to you, your crypto is gone!

Complexity – Wallets need to be set up. Government ID is needed to set up a wallet. There is a definite learning curve with crypto.