Automatic Transfer Service - ATS


DEFINITION of 'Automatic Transfer Service - ATS'

A banking service offered to customers that has both a general and specific meaning. On a general level, it can mean any automatic transfer of funds between customer accounts. For example, a regular transfer from a checking account to pay off a bank loan, or a monthly transfer from a checking account to a savings account.

More specifically, it describes the overdraft protection provided when there is an automatic transfer of funds from a customer's savings account to his or her checking account when there are insufficient funds to cover unpaid checks or maintain a minumum balance. Ordinarily, the bank will transfer the exact amount of funds required to cover unpaid checks. The customer avoids any overdraft fees and all the hassle associated with returned checks.

BREAKING DOWN 'Automatic Transfer Service - ATS'

ATS accounts were first introduced by savings and loans and mutual savings banks in the 1970s to compete with traditional commercial banks. According to the Federal Reserve, in defining the money stock ATS accounts are included in M1, which also includes travelers' checks, demand deposits and other checkable deposits (i.e., negotiable order of withdrawal (NOW) accounts and credit union share drafts).

Given the low rates of interest paid on checking accounts, these arrangements are the norm rather the exception, particularly for checking accounts at brokerage firms. Automatic transfer accounts are available to individuals and sole proprietors; organizations, units of government and other entities are not eligible for these accounts.

  1. Checking Account

    A transactional deposit account held at a financial institution ...
  2. Savings Account

    A deposit account held at a bank or other financial institution ...
  3. Traveler's Check

    A medium of exchange that can be used in place of hard currency. ...
  4. Demand Deposit

    Funds held in an account from which deposited funds can be withdrawn ...
  5. Overdraft

    An extension of credit from a lending institution when an account ...
  6. Credit Union

    Member-owned financial co-operative. These institutions are created ...
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