Sometimes you need to send money quickly and securely. If so, you might use a bank wire to get the job done. The process is fairly easy. Learn how bank wires work and how to send one.

Sending a Bank Wire

If you already know the basics, you’re ready to start the bank wire process. You’ll need the following information:

  • Recipient bank name (the bank you’re sending money to)
  • Recipient bank ABA number or other code
  • Payee’s account number at the bank
  • Any additional information you should provide (further delivery instructions, etc)
If you’re paying somebody, you can just ask for these details. They may provide an instruction sheet with bank wire instructions spelled out for you.

Contact Your Bank

Once you have the information above, contact your bank and ask how to do a bank wire from your account. They may have a form that you have to fill out, or you might be able to start the process online.

Depending on when you submit instructions to your bank, they may complete your bank wire on that same day. Contact your bank after you submit your request to confirm that they have everything they need.

Unlike some electronic payments (such as ACH payments) bank wires cost money. You should expect to pay a fee for the service, and you might even have to pay if you receive a bank wire into your account.

Waiting for Credit

Although bank wires are fast, they don’t always show up in the recipient’s account immediately. The receiving bank often has a queue of incoming bank wires, and it can take time for them to move through them all and credit the ultimate payee.

Money market funds are a popular cash management tool. Before you use money market funds, make sure you know what they are, how they work, and what risks you might be taking.

What are Money Market Funds

Money market funds are mutual funds that invest in the “money markets”. If you imagine that people buy and sell stocks in the stock market, then you can see how people buy and sell money in the money markets. What does it mean to buy or sell money? It means that you borrow or loan money, respectively.

Similar to your deposit accounts at the bank, money market funds take your money and invest it. Then, they pay a portion of their earnings to you in the form of dividends. Money market funds usually pay a monthly dividend, but there are some alternatives out there.

What do Money Market Funds Invest In?

These funds invest in short term instruments that mature in less than 13 months – at a maximum. By keeping a short time-frame, these funds attempt to reduce risk. In fact, the SEC says that the average maturity of all the investments in a money market fund must be less than 90 days. The longer you loan money to somebody, the greater the chance that something will happen and they won’t be able to pay you back.

Typical investments inside a money market fund might be US Treasury issues, short-term corporate paper, and CD’s.

What Risks am I Taking in Money Market Funds?

There are at least three risks that we should highlight.

First, a money market fund is technically a security. The fund managers attempt to keep the share price constant at $1/share. However, there is no guarantee that the share price will stay at $1/share. If the share price goes down, you can lose some or all of your principal. The US Securities and Exchange Commission notes that “While investor losses in money market funds have been rare, they are possible”. In return for this risk, you should earn a greater return on your cash than you’d expect from an FDIC insured savings account (money market funds are not FDIC insured).

Next, money market fund rates are variable. In other words, you don’t know how much you’ll earn on your investment next month. The rate could go up or down. If it goes up, that may be a good thing. However, if it goes down and you earn less than you expected, you can end up needing more cash.

A final risk you’re taking with money market funds has to do with inflation. Because money market funds are considered to be safer than other investments like stocks, long term average returns on money market funds tends to be less than long term average returns on riskier investments. Over long periods of time, inflation can eat away at your returns.

Why Would I Use Money Market Funds?

Investors who want a decent return from a relatively safe investment use money market funds. The investments are typically liquid, meaning you can usually get your money out within a few business days. You can also take advantage of rising interest rates by keeping your money in an investment that will adjust to the markets.

A lot of institutions allow you to write checks that draw from a money market fund. Therefore, you get the advantages of dividend earnings as well as easy access to your cash. Make sure you ask what restrictions or fees your institution has.

Where Can I Get a Money Market Fund?

When it comes to money market funds, you have choices. They are easy to find at brokerage houses and mutual fund companies – your free cash is sometimes swept into a money market fund automatically. More recently, banks are offering money market funds to their customers.

Where Can I Learn More About Money Market Funds?

The best place to find out about a money market fund is the fund's prospectus. You should always read one of these before buying any fund, and you can really learn a lot by reading the prospectus from several different funds.

Most people never notice the differences between credit unions and banks. However, as an educated consumer looking to get the best deals (that is you, right?) you should know how the institutions differ. By reading these fast facts about credit unions, you’ll know what to expect.

Who Owns a Credit Union?

A credit union is an institution owned by the “members” or customers. Contrast this with banks where the customers are just customers. Banks answer to profitability – usually shareholders own a bank and expect financial performance from bank management.

Credit unions are nonprofit organizations that strive for service over profitability. Note that I said that credit unions are nonprofits, however they are not charities. Credit unions must make sound financial decisions.

Who Runs a Credit Union?

If all the customers own the credit union, then who has time to run the place? Credit unions actually have the same types of personnel as banks. Upper management consists of a board of directors who makes decisions on credit union operations. This board is composed of elected volunteers. They don’t do it for pay – rather, they’re credit union members who want a say in how the place is run.

Who Can be a Credit Union Member?

So, what does it take to be a member of a credit union? It depends on the credit union. Credit unions simply have to limit their offerings to people who have a common bond. This bond may be the geographic community, a workplace, a religion, or other type of bond.

Credit unions cannot simply offer their services to anybody who has a pulse. Instead, they are limited to working with those who share the common bond. If a credit union fails to limit membership in this way, they risk losing their status as a credit union.

What Products do Credit Unions Offer?

In its simplest form, a credit union gets money from its customers and loans that money out to other customers.

Credit unions will typically offer the same products and services as larger banks. However, some credit unions will choose not to offer every product and service out there. The reason is that these credit unions do not do the same amount of volume that larger banks do. Banks can afford to have “loss-leaders” or products that get customers in the door. Credit unions will more likely only offer the products and services that a large portion of the membership is likely to use.

Remember how we talked about the members owning the credit union? Some credit union products have different names than their banking counterparts. Your deposits are called shares because they represent ownership (like shares of stock) in the institution.

How Competitive are Credit Unions?

Small credit unions give the big banks a run for their money. Because credit unions tend to focus on service over profitability, the rates can be better at a credit union. If you are a rate shopper, you may not find the attractive CD sales as often. However, a long-term relationship with a good credit union can be profitable.

Remember that some credit unions do not offer the whole universe of products and services that larger banks will. This can give the banks an advantage if you happen to want those particular services.

Is Your Money Safe at a Credit Union?

Credit union deposits are insured very much like your bank deposits. The organization that insures the two types of institutions is different. However, the quality of insurance is the same in my mind - backed by the full faith and credit of the US government.

Borrowers sometimes find that a family loan is the best option. What does it take to set up a family loan properly? You have to consider financial and personal topics to make sure the loan does not become a nightmare.

What is a Family Loan?

A family loan is any loan between family members. It doesn’t matter what the money is for. It’s just a loan that does not use a bank or other traditional lender.

Financial Considerations

To properly design a family loan, the deal must make financial sense. It should be:

  • A good deal for the borrower
  • A good deal for the lender
  • Compliant with local laws and tax laws
If you start with the goal of a win/win situation, your family loan has a better shot at success.

Tax Laws

Forgiving loan balances or payments, and charging too little interest on a family loan can create problems. Make sure you consult with a tax expert to see if your loan follows all the rules. Lenders generally have to charge at least the Applicable Federal Rate (AFR), and follow other requirements.

Emotional Considerations

A family loan is more than a business transaction. Since you know the other party, you should be aware that personal issues make the deal more complicated. Relationships can end on a sour note, holidays can be awkward, and others (who were not part of the deal) can end up in a tough situation if a family loan goes bad.

To reduce the likelihood of problems, be open about everything. There’s no such thing as being too precise or clear about your objectives. Double check with your family members to ensure they see things the same way you do.

Some people say that these loans are always a bad idea. They suggest that you give the money to the family member, or find another way to help them indirectly.

Another suggestion is that lenders should be prepared to lose money on the deal. If you’re not willing to risk kissing that money goodbye, a family loan is a bad idea unless you have collateral.

Documentation

The best way to do a family loan is with a formal document. Spell out the terms of the loan just like a bank would. If any collateral is used, be sure the document is sufficient to secure the lender’s interest (work with an attorney to make sure documents will work in your state).

Good documentation keeps everybody on the same page. You can find sample documents online, purchase loan agreements specific to your needs, or pay a service provider to formalize your family loan for you.

Family Loan Services

If you want help with a family loan, there are several services that provide documentation, legal matters, and payments. These P2P lending sites may help with your family loan:

  • Customizable loans: Virgin Money and their Family Mortgage program
  • Student loans: GreenNote

It's time to open a bank account, but you may be unsure which bank to choose. Of course, the right bank depends on your needs and circumstances. To help you along, let's review some common factors in how people decide which bank to choose. You'll get some ideas, rule out what's not important, and know for certain which bank to choose.

What Do You Need Today?

The decision on which bank to choose usually comes down to an immediate need. If you move to a city and need a local bank for depositing paychecks, you'll probably just pick the bank that fulfills this need with the least amount of effort.

Other Factors

However, you should look at other factors when deciding which bank to choose. A lot of your financial life will revolve around your banking relationships, so it pays to do some research up front.

What Most People Look For

Besides looking at your needs in a banking relationship, here are some common factors that people consider when deciding which bank to choose:

  • Geography - what's close or convenient for opening an account and going to the branch?
  • What bank did Mom and Dad use, and who do my friends use?
  • Is there a credit union or bank that my employer uses or promotes (and maybe has a branch on site or has employees visit the worksite)?
  • Savings Rates - what's the best online savings account rate?
  • Teaser Rates - who's got a nice teaser ad in the paper for CD's?
  • Loan Rates - who can get the best deal on my mortgage or auto loan?
  • Who's got the best fee structure for whatever my banking behavior is (lots of ATM use, for example)
  • Free checking is popular for people getting their first checking accounts
  • Customer service - are the employees nice? Do they annoy you and constantly try to sell you things you don't want or need?