Automatic Transfer of Funds are commonly used to transfer funds from one customer’s account to any other person’s account or to transfer funds from high interest bearing accounts (savings account) to low interest bearing accounts (current account) for overdraft protection. They may also be used for periodic payments such as loan instalments, rent payments, monthly payments for mutual funds etc.
Mr.C has a current account with a balance of $600 and a savings account with a balance of $1000. He gives a cheque of $900 from his current account to Mr.B. In order for the cheque to be cleared there will be an automatic transfer of $300 from Mr.C’s savings account to his current account as he has set up an automatic transfer of funds facility with the bank.