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.

RELATED TERMS
  1. Linked Transfer Account

    Accounts held by an individual at a financial institution that ...
  2. Automatic Transfer Of Funds

    A standing banking arrangement whereby transfers from a customer's ...
  3. Checking Account

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

    A deposit account held at a bank or other financial institution ...
  5. Available Balance

    Balances in checking or on-demand accounts where there is a delay ...
  6. Direct Transfer

    A transfer of assets from one type of tax-deferred retirement ...
Related Articles
  1. Personal Finance

    Explaining Checking Accounts

    A checking account is an account at a financial institution, usually a bank, that allows for deposits and withdrawals.
  2. Personal Finance

    Understanding Savings Accounts

    A deposit account held at a bank or other financial institution that provides principal security and a modest interest rate.
  3. Personal Finance

    Overdrafting

    An overdraft occurs when money is withdrawn from a bank account in an amount that exceeds the funds available in the account. Banks often permit this as a form of short-term loan to the account ...
  4. Personal Finance

    8 Low-Cost Ways To Transfer Money

    If cost is your primary concern, there are several cheap(er) ways to move funds.
  5. Personal Finance

    Transferring Credit Card Balances To A New Card

    Before you take advantage of that new credit card's 0% interest balance transfer offer, read our step-by-step guide.
  6. Personal Finance

    Best Checking Accounts For Couples

    Being a couple, especially if you both have jobs, can help you qualify for benefits and fee waivers that would be tougher to get on just one salary.
  7. Personal Finance

    Your First Checking Account

    This owner's manual will show you what to expect from your bank.
  8. Personal Finance

    Top Checking Accounts With No Overdraft Fees

    Choosing the right checking account could save you hundreds of dollars in fees every year.
RELATED FAQS
  1. How do you calculate payback period using Excel?

    Understand the various fees that can be assessed on a personal or business checking account, and learn methods to avoid being ... Read Answer >>
  2. What are the differences between preference shares and bonds?

    Learn what information banks keep on file for their customers, and understand how this information can be used to deny an ... Read Answer >>
  3. What US banks offer free checking accounts?

    Quit wasting money on monthly fees associated with your checking account and get a free checking account from reputable national ... Read Answer >>
  4. Can a checking account go negative?

    Find out about negative checking account balances and the ramifications. There is a price to pay, but smart consumers can ... Read Answer >>
  5. What economic factors affect savings account rates?

    Find out how supply, demand and central bank policy all affect savings account rates offered by banks for extra deposits ... Read Answer >>
Trading Center