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. Instead of receiving federal payments by check for Social Security, SSI, the Railroad Retirement Board, OPM retirement, VA benefits, DOL/black lung, and civilian or military salary or wages, an ETA allows the recipient to receive his or her federal transfer payment by direct deposit, which is considered to be faster, more convenient and more secure than receiving payment by check.
Since March 1, 2013, all federal payments have been legally required to be made via direct deposit. For federal payment recipients who do not have savings or checking accounts, ETAs provide a means to receive payments in compliance with this law.
Understanding the Electronic Transfer Account (ETA)
An electronic transfer account (ETA) is a federally insured account and is available through those banks, savings and loans and credit unions that have registered with the U.S. Treasury as ETA providers. Money can be withdrawn from the account over the counter, at an ATM or through debit card purchases depending on the account terms, but not through check writing. Additional features of an ETA include:
- 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. However, ETAs may not offer any of the following features:
- Check writing
- Automated Clearing House (ACH) debits
- Recurring bill payments
Investment companies, insurance companies and check-cashing companies cannot offer ETAs. Only federally insured financial institutions, including banks and credit unions, can offer ETAs, and not all such institutions may choose to do so. Individuals can open an ETA regardless of credit history unless they have previously abused an ETA account. Criteria for closing or refusing to open a new ETA account include excessive overdrafts, failure to pay back an overdraft within a reasonable amount of time, carelessness in safeguarding an ATM card or PIN, or fraud. A financial institution can’t close an ETA for any other reason unless asked to by the ETA holder, or the ETA ceases to be used to receive federal payments, or the institution ceases to offer ETAs.