Can You Do an ACH Transfer From a Savings Account?

Automated Clearing House (ACH) transfers are electronic money transfers. Central to financial activities like paychecks and online bill payments, many wonder about using savings accounts for these transactions. This article addresses using savings accounts for these transactions, exploring their interaction for both sending and receiving funds.

Understanding ACH Transfers

An ACH transfer is an electronic movement of money through the Automated Clearing House network. The network clears electronic transactions, distinct from wire or debit card transactions. ACH transfers are a cost-effective and secure way to move money, taking one to three business days to process, though same-day options may be available for a fee.

ACH applications include direct deposit of paychecks, tax refunds, and government benefits. Consumers also use ACH for automatic bill payments, person-to-person payments through payment apps, and transfers between accounts at different financial institutions. Unlike wire transfers, which are faster and more expensive, ACH transactions are used for routine transfers.

Initiating ACH Debits From Savings Accounts

It is possible to send money from a savings account via an ACH debit. This means authorizing a third party, such as a utility company or a payment service, to “pull” funds directly from your savings account. When setting up such a payment, the recipient will require banking details from you.

To initiate an ACH debit from a savings account, provide the bank routing number, your savings account number, and confirm the account type is “savings.” This information is on bank statements, online banking portals, or available by contacting your financial institution. Provide these details to the biller or payment service via an online form, physical authorization, or verbally.

Common Limitations on Savings Account Transfers

Though ACH debits from savings accounts are possible, these accounts are designed for saving and have transaction limitations. Historically, federal regulations limited transfers or withdrawals from savings accounts to six per statement cycle. Although this specific federal limit was removed in 2020, many financial institutions continue to impose similar restrictions.

These limitations apply to “convenient transfers,” including ACH debits for bill payments, online transfers, and debit card transactions. Exceeding these limits can lead to fees, ranging from $3 to $10 per transaction. Repeatedly exceeding the limit can result in the bank converting your savings account to a checking account (which may not earn interest) or closing the account.

Receiving ACH Credits into Savings Accounts

Savings accounts are used for receiving ACH credits, where funds are “pushed” into your account. It is a common method for regular income and financial disbursements. Examples include direct deposits of payroll from employers, tax refunds, or benefits.

To send an ACH credit to your savings account, provide your bank’s routing number, savings account number, and confirmation that it is a savings account. A voided check or direct deposit authorization form, including these details, is a way to share this information. Receiving ACH credits is a straightforward process and not subject to the transaction limits of outgoing transfers.