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.

Key Takeaways

  • A book transfer is the movement of funds from one deposit account to another in the same bank.
  • A change in ownership of an asset, such as a stock or bond, from one owner to another without any physical movement can also be referred to as a book transfer.
  • Float time in a bank is eliminated through the use of book transfers.
  • Book transfers are primarily associated with checking accounts, savings accounts, and money market accounts.
  • A book transfer is different from a wire transfer in that a wire transfer is to an external bank account.
  • There are typically no fees with a book transfer whereas wire transfers cost money.

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.