If you have a bank account, or if you have ever paid a bill electronically, or sent someone money, you have used “Electronic Funds Transfers” (or “EFTs”). Have a second chance bank account? Chances are, you use EFTs to do almost all of your banking transactions.

Over the past few years more and more people have realized the benefits of electronic funds transfers. If you are not one of them there is a good chance that you are not aware of the basics of electronic funds transfers, what they offer, and how they work.

The first thing you should know is that electronic funds transfers are often times known simply as an EFT. EFTs are simply a way for money to be transferred from one account (or person or business) to another without actual paper (or physical checks) being exchanged.

What types of electronic funds transfers are popular? One type that many people use is Direct Deposit. This is when your pay or benefits check is deposited directly into your bank account as opposed to you having to go to the bank to cash a check. Direct deposit has made life much easier for employers and employees all over the world. Direct deposit also makes sure that you have almost instant access to your pay. Get paid on Fridays? With direct deposit, your pay goes into your account first thing in the morning every Friday, and you can use the money right away. No more waiting for checks to clear!

Other types of electronic funds transfers include ATM, credit card, and point of sale transactions.

One of the primary networks that is used to move funds around between banks, companies and people is the Automated Clearing House Network or ACH. For a payment, funds are taken from one company’s bank account to a billing account for the other. Generally speaking, an electronic funds transfer does not take more than one business day to be completed. Of course, there are some reasons why it could take longer.

Now that you know more about electronic funds transfers and how they work it is important to learn about the benefits. Some benefits of electronic funds transfers include less paper being used, quicker exchanges of money, reduce bookkeeping, and a higher level of security. As you can see, the benefits are many.

Although electronic funds transfers have become more popular there are still many consumers and companies that have yet to catch up. For now, the more you know about electronic funds transfers and the benefits the better off you will be.

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Related ChexSystems Banking Information:

1. Electronic Check Presentment
2. On ChexSystems? You Need to Understand Checking and Savings Accounts
3. Finding a Checking Account No Deposit Required
4. How Your Checking Account Works
5. How Do I Add Money To a Prepaid Debit Card?

Tagged as: ACH, direct deposit, EFT, electronic funds transfer