Automated Clearing House Electronic Transfers Explained | Generated by AI
ACH stands for Automated Clearing House. It’s an electronic network used in the United States for processing financial transactions between banks and other financial institutions.
What it actually does (in simple terms):
- It’s the system that handles direct deposits (like your paycheck), automatic bill payments, and person-to-person or business-to-bank transfers.
- When you “connect your bank via ACH” at a broker like Interactive Brokers (IBKR), you’re giving them permission to electronically pull money from (deposit) or push money to (withdrawal) your checking/savings account.
- Transfers via ACH are usually free or very low-cost, but they’re not instant — they typically take 1–3 business days to complete (sometimes faster now with “Same Day ACH”).
Key features of ACH transfers:
- Secure and regulated by NACHA (the organization that governs the ACH network)
- Much cheaper than wire transfers
- Used for things like:
- Depositing or withdrawing money to/from brokerage accounts (exactly what IBKR is asking for)
- Paying rent, utilities, or subscriptions automatically
- Getting your salary or tax refund deposited directly
In short: Linking your bank via ACH at IBKR just means you’re setting up a trusted electronic pipeline so you can move money in and out of your brokerage account without mailing checks or paying high wire fees. Once it’s set up once, future transfers are quick and easy from inside your IBKR login.