Investor's wiki

Automatic Transfer of Funds

Automatic Transfer of Funds

What Is an Automatic Transfer of Funds?

An automatic transfer of funds is a standing banking arrangement by which transfers between a client's (at least two) accounts are made on a customary, periodic basis under indicated conditions. Automatic transfers are executed minus any additional guidance or action by the client; a common way that automatic transfers are executed is through "clear" guidelines, by which all excess funds in a single account are cleared into another account. The automatic transfer of funds is one core offering of both commercial and online banks.

How an Automatic Transfer of Funds Works

Automatic transfers are often utilized for the standard movement of funds from a checking account to a savings account. Automatic transfers might be utilized to transfer money between the accounts of two mates, or between a parent and a child. Setting up automatic transfers to pay bills is a helpful budgeting device since they can be utilized for periodic equivalent payments, for example, for mortgages or other loan payments.

One more common utilization of these transfers is for overdraft protection, by which funds are moved from a higher-premium procuring account to cover payments due in another account.

Corporations with various auxiliaries will here and there utilize a zero-balance account (ZBA). A ZBA often sorts out for the automatic transfer of funds since it is a checking account in which a balance of zero is kept up with. At the point when funds are required in the ZBA, the specific amount of money required is moved to the account through an automatic transfer of funds from a central, or master, account.

Corporations likewise may utilize a ZBA in the event that its employees have company credit or debit cards since it considers greater control concerning the distribution of company funds (alongside restricting excess balances). A ZBA account can assist with guaranteeing that managers pre-endorse every type of effort on company debit/credit cards. After endorsement, an automatic transfer of funds from a master account is initiated in amounts just large enough to cover the charges introduced.

Special Considerations

Among online banks, cybersecurity has become especially critical to forestall making electronic data helpless against damage or theft. At the point when data is transferred across networks, for example, during an automatic transfer of funds, cyberattacks may happen.

Cyberattacks can happen in a scope of forms, incorporate backdoor assaults, in which a criminal exploits an alternate method of accessing a system; denial-of-service assaults, which keep a legitimate client from accessing a system; and direct-access assaults, incorporates bugs and infections, which gain access to a system and copy its data and/or change the system.


  • Automatic transfers can be utilized to move money starting with one bank account then onto the next one, as from a checking account to a savings account.
  • An automatic transfer of funds is a standing banking arrangement by which transfers from a client's account are made on an ordinary, periodic basis.
  • Practically all brick-and-mortar banks and online banks offer automatic transfer services to their customers.