What Is an Electronic Transfer Account (ETA)?

An electronic transfer account (ETA) is a bank account for federal payment recipients who do not have checking or savings accounts. ETAs provide an alternative to receiving federal payments by check for Social Security, SSI, and the Railroad Retirement Board.

ETAs are also available for Office of Personnel Management (OPM) retirement, veterans benefits, DOL/black lung, and civilian or military wages. An ETA allows the recipient to receive his or her federal transfer payment by direct deposit. Direct deposit is considered to be faster, more convenient, and more secure than receiving payment by check.

By law, all federal payments must be made via direct deposit. ETAs provide a way for federal payment recipients to comply with this law without a savings or checking account. Those who cannot or do not want to use an electronic transfer account (ETA) can choose to receive federal payments on a Direct Express prepaid debit card.

Key Takeaways

  • An electronic transfer account (ETA) is a bank account for federal payment recipients who do not have checking or savings accounts.
  • Depending on the account terms, money can be withdrawn from the account over the counter, at an ATM, or through debit card purchases.
  • ETAs do not support check writing, Automated Clearing House (ACH) debits, or recurring bill payments.

Understanding Electronic Transfer Accounts (ETAs)

Electronic transfer accounts (ETAs) are federally insured. They are available through banks, savings and loans, and credit unions that have registered with the U.S. Treasury as ETA providers. Depending on the account terms, money can be withdrawn from the account over the counter, at an ATM, or through debit card purchases. However, it is not possible to withdraw funds from an ETA by writing a check.

An ETA is not a checking account, so you cannot use it to write checks.

Investment companies, insurance companies, and check-cashing companies cannot offer ETAs. Only federally insured financial institutions, such as banks and credit unions, can provide ETAs. What is more, federally insured financial institutions do not have to offer ETAs.

If ETAs are offered, all individuals can open an ETA regardless of credit history, unless they have previously abused an ETA account. Valid reasons for closing or refusing to open an ETA include excessive overdrafts and failure to pay back an overdraft. Carelessness in safeguarding an ATM card or PIN and fraud can also be grounds for closing an account or rejecting an application. The provider can also close the account if it is not used for federal payments anymore.

Finally, financial institutions can close all accounts if they decide that they no longer want to provide ETAs to anyone.

Advantages of an Electronic Transfer Account (ETA)

The most significant benefits of an ETA include the following:

  • No minimum balance
  • Automatic direct deposit of federal payments
  • The ability to deposit funds from other sources at the customer’s discretion
  • At least four free cash withdrawals per month
  • At least four free balance checks per month, which does not include balance information given as a receipt following a deposit or withdrawal
  • A maximum service charge of $3 per month
  • A monthly account statement
  • Some financial institutions may choose to pay interest on ETAs

Disadvantages of an Electronic Transfer Account (ETA)

Notably, ETAs do not support any of the following features:

  • Check writing
  • Automated Clearing House (ACH) debits
  • Recurring bill payments