Sending Money Quickly: The Pros and Cons of Various Methods

Your brother is stuck in a small town a few states away. His wallet was stolen and he’s without a vehicle. “Help!” he cries! He needs some cash as soon as possible. What are you going to do to help him?

Your daughter loses her job. She calls you up and begs for some help making the rent this month. How will you get the money to her?

Transferring money between people is a tricky problem. In a nutshell, the more flexible it is, the more you’ll pay, and the quicker it is, the more you’ll pay.

Obviously, there are a lot of different ways to transfer money between people who are separated by distance. Below, I’ve outlined four of the most common ones. Each plan has some benefits and some drawbacks to it and is perhaps most appropriate in different situations.

Western Union
Western Union has been a straightforward way to send money electronically since the days of the telegraph. The process is simple – you simply have the person you’re sending money to go to an agent location with a form of ID and you can send the money from your computer (or from another agent location). The recipient has cash in their hands in a few minutes.

When I was young, my family used Western Union a few times in a pinch. In particular, I remember my mother using it twice when my older brother was in the Navy and needed cash in a big pinch – we were in Illinois and he was in California.

Pros: It’s quick and requires almost nothing from the recipient (only a form of ID).
Cons: It’s very expensive compared to other methods. It does require that a Western Union office be available somewhere near the recipient.
When to use it: A person needs money immediately and has fairly limited resources.

Electronic transfer
To put it simply, electronic transfers means transferring money directly from one account at a financial institution to another account, either at the same institution or another institution. I personally use this method fairly often. It’s my preferred way to send money if it doesn’t need to be there instantaneously.

Pros: It usually costs nothing and can often be done from your computer with just a routing number and an account number.
Cons: It often takes several days to make it happen.
When to use it: The other person has a bank account and has some time.

Money orders
Money orders can easily be sent from any post office (and from some private businesses).

I generally find this solution works best when you’re not sending a large amount – some smaller post offices won’t cash money orders for enormous amounts. If you send an exceptionally large money order, the recipient (if they do not have a bank account) may wind up using a check-cashing service to cash it, which will knock 5% or so off their amount – not a good solution.

Pros: The only requirement for a recipient is that they can receive mail. They’re also pretty convenient to send.
Cons: It costs about a dollar and takes a few days to arrive.
When to use it: The recipient has limited resources and no local bank where they have an account.

Checks
Although many people still send checks for many purposes, I now see checks for person-to-person transfers as an archaic thing, surpassed by electronic transfers (which, in the end, are basically the same thing without the paper document).

Pros: It’s virtually free and incredibly convenient.
Cons: The recipient has to be able to receive mail, it takes a few days to arrive, and the recipient should have a bank account (or else they’ll have to use a check-cashing service).
When to use it: Most uses that aren’t covered above, though I prefer electronic transfers in most situations.

What solutions do you use for such transfers? What situations do they work best in?

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