Updated: Sep 20, 2024

Having a bank account is crucial when it comes to managing cash flow. Whether you are an individual or a business, having a place where you can cash checks and deposit funds is a crucial component of achieving your financial goals. More important, being able to access your money when you need it can make all the difference in the world; and with many technological advancements, it’s now easier than ever to make withdrawals from a bank account.

Traditional Methods

Before electronic methods, there were only two ways to make a withdrawal, and both methods are still used today. The first method is to write a check. Checks can be written for just about any amount, and can be made payable to a business or an individual. The check is deposited at one financial institution and presented to the financial institution where the money is currently deposited. The check is paid based on the availability of the funds. The other method is a teller withdrawal. A withdrawal slip or check can be presented to a teller, and the funds are paid contingent on the funds being available.

Electronic

In 1978, Congress passed the Electronic Funds Transfer Act. It established the rights and responsibilities of all parties involved in electronic transactions. The cost of an electronic transaction is about a tenth of the cost to issue and process a check. Both customers and financial institutions benefit from the lower cost and faster processing of electronic transaction. Today it’s easier than ever for customers to pay bills or transfer money. Electronic Funds Transfer (EFT) and Automated Clearing House (ACH) are two methods by which money can be withdrawn from a bank account. They are both done using the ABA/routing number and the bank account number. The withdrawal can be a transfer to another account, or it can be a payment. An electronic check, or E-check, is similar to the traditional method of writing a check. A check is presented electronically and money is withdrawn without having to visit a bank. Both handwritten and computer-generated checks can be presented electronically. Federal Reserve Wire Network, or Fedwire, can be initiated online or at a local bank. Money is transferred from one account to another usually within an hour or two. The Fedwire system is designed to be highly reliable. Many high-dollar value transfers and payments are done by Fedwire.

ATM/ Debit Cards

Automated teller machines were introduced in the 1970s as a way to reduce the banks need for tellers. It also provided customers with convenient access to their cash when banks were closed. For the first time, customers could access their money whenever they wanted. Today, ATMs are used just as much during banking hours as they are when banks are closed. With an ATM card, customers can enter their personal identification number (PIN) and access cash, make deposits or transfer funds. In the mid 1980s, debit cards were introduced. It allowed customers to make purchases anywhere Visa or MasterCard was accepted. The funds would be debited directly from the customer’s bank account. Today, the majority of bank cards issued are debit cards.

Considerations

The method of withdrawal used depends a great deal on how much money you need to withdraw. If you only need a few hundred or less, an ATM or teller withdrawal may be your best option. If you need more, a check or electronic payment may be safer. Also, consider what the money will be used for. Payments and large purchases are commonly paid for by check or electronically, for safety and traceability. Fees are also a big consideration. Some merchants and financial institutions charge fees to make payments or transfer money. Make sure you are aware of all fees before you decide.