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. Checking Account

    A transactional deposit account held at a financial institution ...
  2. Transfer

    A change in ownership of an asset, or a movement of funds and/or ...
  3. Savings Account

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

    Balances in checking or on-demand accounts where there is a delay ...
  5. Bank Deposits

    Money placed into a banking institution for safekeeping. Bank ...
  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. Investing

    A Guide to Bank Accounts

    Find out which type of bank account suits your specific needs.
  3. 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.
  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. Managing Wealth

    How To Cut Your Banking Fees

    Smart consumers can side-step most of the new bank fees by investing some time and effort.
  6. 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.
  7. Managing Wealth

    Top Premium Checking Accounts of 2015

    Which banks offer the best deals for premium checking accounts – and what do you have to do to qualify for one?
  8. Personal Finance

    Handling High-Yield Savings Accounts

    Is this the savings route for you? Read on to find out what these accounts have to offer.
  9. Managing Wealth

    2015's Top Checking Account Promotions

    Open a checking account in 2015 and the bank could give you a cash bonus. Check out these top offers.
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. For what types of accounts are demand deposits available?

    Learn about the different types of accounts designated as demand deposit accounts, such as savings accounts and money market ... Read Answer >>
  3. What Are the Pros and Cons of Online Checking Accounts?

    Learn about the ways an online checking account can save you time and money, but understand the drawbacks before signing ... Read Answer >>
  4. How long does it take a check to clear?

    It usually takes two days for a check to clear, but in some cases it may take longer. Discover how banks treat large deposits ... Read Answer >>
Trading Center