Posted in Finance, Accounting and Economics Terms, Total Reads: 168
Definition: Automatic Transfer Service
Automatic Transfer Service is a savings account which allows the account holder to transfer funds automatically to a checking account. It may also mean any automatic transfer of funds between customer accounts. It is a type of service provided by the banks to combine a standard savings account and a standard checking account.
An ATS provides flexibility to cover any overdraft or excessive amount. It provides a means by using which money gets automatically transferred from savings account to checking account and it integrates the two accounts.
An Automatic Transfer Service Account can transfer funds to maintain a minimum balance in a checking account or to ensure that funds are available to cover a check. The bank will transfer exact amount of money required to cover unpaid checks. Any hassle associated with the returned checks and any overdraft fees are avoided by the customer.
The main advantages of ATS are that the funds are transferred the same day and in the event of money not available in the checking account, the bouncing of the check is prevented as the minimum balance is maintained. Also the customer is able to view the amount of funds transferred in the integrated accounts. Hence it reduces errors and the risk associated with the mismanagement of funds.
ATS accounts were first introduced by savings and loans and mutual funds banks to compete with traditional commercial banks. According to Federal Reserve, ATS accounts are included in M1 which measures the most liquid components of the money supply and includes travelers’ checks, demand deposits and other checkable deposits. ATS accounts are available to individuals; organizations, government and other entities are not eligible.