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 checking account is a deposit account at a financial institution ...
  2. Transfer

    A change in ownership of an asset, or a movement of funds and/or ...
  3. Automatic Transfer Of Funds

    A standing banking arrangement whereby transfers from a customer's ...
  4. Linked Savings Account

    Any type of bank savings account that is linked by account number ...
  5. Savings Account

    A deposit account held at a bank or other financial institution ...
  6. Book Transfer

    The transfer of funds from one deposit account to another at ...
Related Articles
  1. Investing

    A Guide to Bank Accounts

    Find out which type of bank account suits your specific needs.
  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. 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?
  5. 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.
  6. Managing Wealth

    Checking Account Reviews: Chase Premium Platinum

    Which perks and services come with Premier Platinum and is it worth the cost to you?
  7. 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.
  8. Personal Finance

    These Savings Accounts Have the Highest Interest Rates

    Don't expect interest from a bank savings account to make you rich. You can do better, however, than the paltry 0.08% average paid in 2015.
  9. 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. 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 >>
  2. 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 >>
Trading Center