What is the difference between an automatic draft (for online bill payments) and ACH payments?
I have recently set up a very basic savings account at my mothers credit union and yesterday when I called the credit union to ask if I could set up online payments to come out of this account, the teller told me that this account only accepts ACH payments. What does that mean?
- Smokies HikerLv 78 years agoFavorite Answer
Usually a "ACH" or Automatic Clearing House payment is only used by businesses with large amounts of money changing hands, or the government depositing money into your account. You would probably need to set up a checking account in addition to the savings account, so smaller amounts of money could be automatically deducted from the checking account for on line purchases. The nice thing about having both a checking and savings account at a banking institution, is the fact that you can keep the bulk of your money in the higher interest paying account ( usually the savings account ) and transfer it to the checking account when funds will be needed.
- 4 years ago
I labored in banking and having experience in this discipline there is a clear difference. ACH are electronic transfers that go by means of the automated Clearing condo method which is a transfer that takes a couple of trade days. Its commonly free, but some banks cost a nominal fee. Wire transfers go immediately via the Federal Reserve rather of an ACH 1/3 social gathering, and they may be able to submit within 24 hours. Wire transfers are more often than not the option for persons trying to transfer significant quantities of dollars very swiftly and are not able to wait the 2-4 trade days an ACH/standard EFT will take. However the cost is typically quite massive (most US banks charge between $20 and $50 for the carrier and that is only for home debts, international expenses will be larger). Oh, and EFT is a conventional time period that may practice to either wire switch or an ACH switch. Each are electronic (electronic cash transfer).
- Go with the flowLv 78 years ago
She might have meant ACH deposits only.
Like direct deposit from your employer.
All savings accounts I know do not allow debits to pay your bills.
For this, you would need a checking account.
*That's the difference between a savings account and a checking.
If you could pay bills with a savings account, then there would be no difference between the two accounts.
They would both be called checking accounts.