Automatic Transfer Of Funds

AAA

DEFINITION of 'Automatic Transfer Of Funds'

A standing banking arrangement whereby transfers from a customer's account are made on a regular, periodic basis without further instruction or action by the customer. The most common automatic transfer of funds are through "sweep" instructions, whereby all excess funds in one account are swept into another account. This zero-balance account is mostly used by corporations with many subsidiaries.

INVESTOPEDIA EXPLAINS 'Automatic Transfer Of Funds'

Automatic transfers are often used for the regular movement of funds from a checking account to a savings account, or from the account of one spouse to another or to a child. Another common use of these transfers is for overdraft protection, whereby funds are moved from a higher-interest-earning account to cover payments due in another account.

Automatic transfers may also be used for periodic equal payments, such as for mortgages or other loan payments.

RELATED TERMS
  1. Automatic Bill Payment

    A money transfer scheduled on a predetermined date to pay a recurring ...
  2. Money Market Account

    An interest-bearing account that typically pays a higher interest ...
  3. Automatic Transfer Service - ATS

    A banking service offered to customers that has both a general ...
  4. Automatic Savings Plan

    A type of personal savings system in which the plan contributor ...
  5. Zero Balance Account - ZBA

    A checking account in which a balance of zero is maintained by ...
  6. Sweep Account

    A bank account that automatically transfers amounts that exceed ...
RELATED FAQS
  1. What are the pros and cons of online checking accounts?

    Online banking offers a convenient alternative to keeping your checking account with a brick-and-mortar bank. With an online ... Read Full Answer >>
  2. Why would you keep funds in a money market account and not a savings account?

    Most banks offer both money market accounts and savings accounts for depositors, although money market accounts are less ... Read Full Answer >>
  3. What is the difference between a state and a federally chartered credit union?

    The world of credit unions is divided into two categories: state chartered and federally chartered. Though they share many ... Read Full Answer >>
  4. What's a better way to borrow money: overdraft or credit cards?

    If you have an overdraft line of credit at your bank, you can spend more than the amount in your checking account. In exchange ... Read Full Answer >>
  5. What are the pros and cons of overdraft protection?

    If you sign up for overdraft protection and link your checking account to your savings account, a credit card or an overdraft ... Read Full Answer >>
  6. If I want to have some cash in a liquid account for unexpected emergencies, what ...

    It's always a good idea to keep some money set aside in a liquid form, but it's a double-edged sword, because the more liquid ... Read Full Answer >>
Related Articles
  1. Savings

    10 Tips For Achieving Financial Security

    Follow this sound advice and plan for a comfortable future.
  2. Options & Futures

    How Much To Save To Become A Millionaire

    With a little discipline and the help of some powerful savings vehicles, anyone can hit this mark.
  3. Options & Futures

    Automating Your Bill Payments

    Automation can be a painless (and free) way to remove the stress of bill scheduling from your life - if you do it right.
  4. Personal Finance

    Procrastinator's Guide To Bill Payment

    Avoid punishing late fees and keep your credit score intact with these 10 tips.
  5. Credit & Loans

    The Pros & Cons Of Personal Loans vs. Credit Cards

    One is not like the other. We help you decide where to borrow money from.
  6. Budgeting

    Should You Pay Your Bills On Autopilot?

    Now that you can sign up to have your bills paid automatically online, it it a smart way to make your life more efficient? A look at the pros and cons.
  7. Personal Finance

    4 Tips To Cut Your Monthly Bank Fees

    We asked banking professions to share their biggest tips for tackling bank fees, and hopefully save more even before spring hits.
  8. Savings

    Mortgage Faceoff: Bank of America Vs. Wells Fargo

    Which bank offers the better mortgage deal? Here's how they compare on two popular types of mortgage.
  9. Savings

    Say Goodbye To Overdraft Fees

    At $35 a pop, overdraft fees can mount up quickly. Here are 4 different strategies for avoiding them.
  10. Savings

    Top Checking Accounts With No Overdraft Fees

    Choosing the right checking account could save you hundreds of dollars in fees every year.

You May Also Like

Hot Definitions
  1. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  2. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  3. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  4. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
  5. Tangible Net Worth

    A measure of the physical worth of a company, which does not include any value derived from intangible assets such as copyrights, ...
  6. Marginal Utility

    The additional satisfaction a consumer gains from consuming one more unit of a good or service. Marginal utility is an important ...
Trading Center