Book Transfer
A book transfer is the transfer of funds from one deposit account to another at the same financial institution. Like a book transfer, a wire transfer entails no physical exchange of money; instead, banking institutions pass information regarding the recipient, their bank account number, and how much money they are receiving. A book transfer is different from a wire transfer in that a wire transfer is to an external bank account. Slightly more complicated than a book transfer, a wire transfer is an electronic transfer of funds across a network, administered by hundreds of banks around the world. A wire transfer costs money, and banks charge anywhere between $10 to $50 for domestic wire transfers and can typically charge more for international transfers.
What Is a Book Transfer?
A book transfer is the transfer of funds from one deposit account to another at the same financial institution. An example would be when an individual moves funds from their checking account to their savings account. It can also be used to refer to the change in ownership of an asset, such as a stock or bond, from one owner to another without any physical movement of the related documents. Book transfers are beneficial to a bank's operations as they are instantaneous and remove the float time in checking transactions.
Understanding a Book Transfer
Book transfers are a means of eliminating float or the time between when an individual deposits a check and the institution clears it. For example, if someone writes a check today for payment, a period of days or weeks might lapse before the check is cleared and the funds removed from the payer's account. This lapse enables the paying bank to earn interest on those funds for the period before the check is cleared but it is a form of double counting.
The use of a book transfer eliminates float time and really applies to customers within the same financial institution that exchange money. Book transfers are generally between deposit accounts, which can encompass savings accounts, checking accounts, and money market accounts.
Book Transfers vs. Wire Transfers
Slightly more complicated than a book transfer, a wire transfer is an electronic transfer of funds across a network, administered by hundreds of banks around the world. Wire transfers allow individuals or entities to send funds to other individuals or entities in different financial institutions, while still maintaining efficiency. U.S. law considers wire transfers to be remittance transfers. Like a book transfer, a wire transfer entails no physical exchange of money; instead, banking institutions pass information regarding the recipient, their bank account number, and how much money they are receiving.
A wire transfer costs money, and banks charge anywhere between $10 to $50 for domestic wire transfers and can typically charge more for international transfers. Book transfers, on the other hand, are typically free, as they are simply a movement of money within a financial institution. This is certainly the case when an individual moves money from their checking account to their savings account within the same bank.
Related terms:
Certificate of Deposit (CD)
A certificate of deposit (CD) is a bank product that earns interest on a lump-sum deposit that's untouched for a predetermined period of time. read more
Checking Account
A checking account is a deposit account held at a financial institution that allows deposits and withdrawals. Checking accounts are very liquid and can be accessed using checks, automated teller machines, and electronic debits, among other methods. read more
Clearing
Clearing is when an organization acts as an intermediary to reconcile orders between transacting parties. A clearing bank approves checks for payments. read more
Demand Deposit
A DDA or demand deposit account consists of funds held in an account that can be withdrawn by the account owner at any time from the depository institution. read more
Financial Institution (FI)
A financial institution is a company that focuses on dealing with financial transactions, such as investments, loans, and deposits. read more
Float
The float is essentially double-counted money: funds within a financial or banking system that are briefly accounted for twice due to the time gap in processing deposits or withdrawals that are often in the form of paper checks. read more
Interest
Interest is the monetary charge for the privilege of borrowing money, typically expressed as an annual percentage rate. read more
Money Market Account and Pros & Cons
Money market account is an interest-bearing account at a bank or credit union, not to be confused with a money market mutual fund. read more
Remittance
A remittance is a sum of money sent to another party, usually in another country. Remittances are a major source of income for people in poor nations. read more
What Is a Value Date?
A value date is a future point in time used to value a product that can otherwise see fluctuations in its price. read more