Automatic bill pay is an arrangement some banks offer that allows you to pay recurring bills by having the amount due automatically paid from your checking account on a schedule you select. The best candidates for automatic payments are bills that are the same amount every month, such as your rent or home mortgage payments, other fixed loans, and some utilities. Automatic bill pay eliminates the need to write a check, saves you time and postage, and reduces the possibility of late or missed payments.

For payments that vary from month to month, many banks offer online bill paying services. You specify the amount and authorize the payment, and the amount is debited directly from your account. This approach gives you the opportunity to review the bill and adjust the amount you pay with each billing cycle.

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Automated Clearing House (ACH) is a nationwide electronic funds transfer system that connects US financial institutions and enables the processing of electronic payments. The payments clear through the Federal Reserve Bank system and the Electronic Payments Network.

ACH processes a variety of payments, including direct deposit of payroll, Social Security, and other government checks, as well as tax refunds you elect to have deposited directly into your bank account. ACH is faster, safer, and less expensive than processing paper checks, and funds are generally available immediately. The system also handles consumer payments, such as mortgages and utility bills. For example, if you authorize your bank to automatically debit your car loan payment from your checking account on the first day of each month, ACH will process the payment.

More and more businesses are also using ACH as a secure way to transfer money among themselves and to collect amounts due from customers immediately rather than using credit cards or other payment options.

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Automatic Teller Machine, or ATM, gives you access to the cash in your bank account or to a line of credit, such as a credit card, home equity line of credit, or overdraft line of credit. If your bank is a member of the ATM's network, you can make withdrawals any time the ATM is open, often 24 hours a day, 7 days a week.

Some banks offer free withdrawals if you use ATMs they own or that are part of a specific network. Many charge a fee for using another provider's ATMs. Still others charge a fee for each ATM transaction and sometimes impose double fees if you withdraw from another provider's machine.

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Balance is the amount you currently have on deposit in a bank account or the entire amount you owe on a mortgage or credit card. Your account balance fluctuates as you add money, make withdrawals, or authorize payments from the account. Similarly, your mortgage or other loan balance declines as you make payments each month.

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Credit, in its simplest meaning, is your ability to borrow money. Being creditworthy, or having good credit, can help you get the best interest rates on a mortgage, loan, or credit card as well as qualify for a job or apartment. You can build and maintain good credit by using it wisely ' borrowing only as much as you can pay back comfortably and making timely payments ' while taking care to safeguard against ID Theft. In another usage, money added to your account is referred to as a credit whereas money subtracted is called a debit. Similarly, a credit balance is the positive balance you have in a bank or other account.

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Debit is an amount subtracted from an account or the process of subtracting money from an account. When you authorize automatic bill payments, for example, the bank debits, or subtracts, the appropriate amount from your account in order to make the payment. A bank also debits fees, ATM withdrawals, and debit card purchases from your accounts as you incur them.

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Debit Cards which look like credit cards and usually have a credit card logo, are an alternative to paying cash. When you use a debit card to make a purchase or pay a bill, you are authorizing your bank to take the amount of money owed directly from your checking account and credit it to the recipient's account.

In many instances, you complete the transaction by entering your personal identification number (PIN) on a keypad at the point of purchase. In some cases, you instead sign your name as you do with a credit card purchase. But unlike a credit card, when you use a debit card the funds are immediately withdrawn from your account. Any purchase you authorize without entering your PIN is known as a signature-based transaction, and includes purchases you make online or over the phone.

Because of the potential for fraud, it's important to check your bank statement record of debit card purchases carefully to make sure you authorized them. Some debit cards provide less protection than the typical credit card if your card is lost, stolen, or used fraudulently. Under federal law, your liability for unauthorized purchases depends on how quickly you report your card lost or stolen. The maximum liability is $50 if you report your card lost or stolen within two days of discovering it. If you report an unauthorized transfer within 60 days after the receipt of the bank statement on which it is reported, the maximum loss is $500. If you wait more than 60 days your liability is unlimited. This can be a particular problem if your account has an overdraft line of credit, which can extend your losses even beyond your account balance. A few banks may provide additional protection for their customers, so check with your bank to find out its policy.

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Direct Deposit allows you to have money that's owed to you transferred directly into your bank account rather than sent to you by paper check. Many employers, financial institutions, and agencies of the federal government make direct deposit available, including Social Security, veterans' benefits, and income tax refunds. Some state governments may also offer direct deposit for regular and special payments.

Direct deposit means the money is available immediately. Plus there is no risk that the check will be lost or stolen. In addition, some banks offer depositors free checking if you have your payroll check deposited directly into your account.

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Electronic checks are a service some banks offer. These checks allow you to make secure electronic transfers to individuals who aren't otherwise set up to receive direct payments. For example, you might want to use an electronic check to lend money to a family member or to pay your babysitter or dog walker. The money can be transferred faster and more securely than if you write and mail a paper check. To make the transfer, you fill out the electronic check online at your bank's website, providing information about the recipient, including name, email address, and bank routing number, as well as the amount to be paid.

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Electronic transfer, or electronic funds transfer, is a computerized process that executes financial and bank transactions. Anytime you use your ATM or debit card, funds are transferred electronically from your account so you can take cash out of the ATM or make a purchase. Other common electronic transfers include direct deposit of payroll checks, utilities or other online bill payments, and preauthorized transfers, such as automatic bill pay.

More sophisticated electronic wire transfers are also possible. For instance, if you want to transfer a large sum of money from your checking account to a brokerage firm account, you can authorize a wire transfer from the bank to the firm. Such arrangements are faster and safer than writing a check, although there is often a fee for this service.

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Float is the time that elapses between when you deposit a paper check and when the money is available for you to use. A float may last from one business day up to a week, depending on the type of check, the bank against which the check was drawn, and the amount of the check. However, checks that are direct deposited and electronic checks typically clear instantly or by the end of the business day.

Float also refers to the time between when you write a check and when it is debited from your account, a process known as clearing. Increasingly checks are cleared electronically at the time they're deposited, which means your float lasts only until the recipient puts your check in the bank

If you pay by debit card, the amount is debited directly from your account at the time of the transaction, so there is no float. However, there is a float when you use a credit card, since you may have several weeks between the date of purchase and the date your bill is due to make the payment.

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Joint accounts are bank or investment accounts owned by two people rather than one. Each of the joint owners has access to the assets in the account and can make withdrawals, write checks, or authorize other transactions without the signature of the other. Most joint accounts are titled "joint with right of survivorship," which means if one owner dies, the survivor becomes the sole owner of the account. Joint bank accounts are insured by the FDIC for up to $250,000 per depositor per bank.

Married couples and domestic partners often have joint accounts to handle household finances. You may also have a joint account with an elderly parent or other relative to allow you to pay bills and handle other financial transactions in case the other person is unable to do so. And where state laws allow, you may be able to open a joint account with a child. However, rules vary widely from one bank to another, so check with your bank.

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Laddering is a strategy for taking advantage of the higher interest rates normally available on longer-term certificates of deposit (CDs) and other term accounts while at the same time establishing a pattern of rolling maturity dates. To create a CD ladder, you might divide your principal into three or more equal portions ' for instance, investing one-third in a 12-month CD, one-third in a 24-month CD, and the final third in a 36-month CD. Each year as a CD matures, you reinvest in a new 36-month CD.

Laddered CDs can be a smart way to invest money you're planning to use to pay expenses that recur over a period of years, such as college tuition. You can time the maturity dates to coincide with the payment due dates. Rolling maturity dates allow you to reinvest a portion of your total principal at the rate that's current at the time. Interest rates tend to fluctuate, so that rate may be higher or lower than the previous rate.

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Minimum balance requirements are rules that require you to keep at least a specified amount of money in your savings or checking account at all times to keep an account open or to qualify to earn interest or avoid monthly account maintenance, check-writing, or ATM fees. Most but not all banks impose these requirements, and those that do determine what the balance is. It may range from $100 or less to several thousand dollars, depending on the bank and the type of account.

Some banks that normally set a minimum balance requirement waive it if you have your paycheck deposited directly into your account. Other banks may waive the requirement on some but not all accounts they offer.

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Non-sufficient funds (NSF) fees, sometimes called insufficient funds fees or overdraft fees, are imposed by some banks when the available balance in your checking account is too small to cover the amount you spend by authorizing a bill payment, making an ATM withdrawal, using a debit card, or writing a check. The fee varies by bank, but can be $35 or more for each overdraft. Some banks charge higher fees or may refuse to allow you to open a checking account if you've written checks against insufficient funds in the past.

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Overdrafts occur when you spend more than the available balance in your checking account, whether by writing a check, authorizing a bill payment, taking an ATM withdrawal, or making a debit card purchase. For example, if you have a $75 available balance and authorize a bill payment of $100, your account is overdrawn by $25. When this happens the bank has the choice of honoring the payment or refusing to do so.

If a bank refuses to cover an overdraft, the transaction will not go through, and you may be charged a non-sufficient funds (NSF) fee. In addition, the recipient of the check may charge a returned check fee as well as a late fee if a payment was due. Writing a check that isn't honored is sometimes known as bouncing a check.

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Overdraft protection helps you avoid some of the financial consequences of spending more than your available balance. Depending on the bank where you have your account, this protection can take several forms. Some banks offer informal overdraft protection for customers, choosing to honor a check, ATM withdrawal, debit purchase, or bill payment even though the amount is greater than your available balance. Most charge a non-sufficient funds (NSF) fee for this service.

Other banks allow you to apply for an overdraft line of credit. This lets you exceed your account balance up to a predetermined amount. If you take advantage of this service, you pay interest on the amount of money you borrow to cover the overdraft until you repay it. Some but not all banks also impose a non-sufficient funds (NSF) fee in addition to the interest.

Several other arrangements can also provide overdraft protection. Some banks allow you to link your checking and savings accounts and will transfer money from one to the other to cover overdrafts. Banks typically charge a transfer fee for this service, but it is generally much less than the fees you would pay for bouncing a check.

If you have access to an overdraft line of credit, it may be tempting to use it like any other revolving line of credit, such as a credit card. But it's important to understand the interest rate, as well as other fees you may be paying when you tap into it, may be considerably higher than on other credit sources to which you have access.

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Payee is one way of referring to the intended recipient of the money that's transferred by check, bill pay, or money order. For instance, it you pay your electric company bill by automatic bill pay, the utility company is the payee. On a check, the payee's name goes on the "Pay to the order of" line.

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Personal identification number (PIN) is the secret password or code you use to identify yourself and gain access to your bank or credit card accounts at ATMs, online, and in retail establishments. If your ATM card is lost or stolen, the PIN protects your account from unauthorized access. After several incorrect attempts to guess your number, the system will freeze the account, preventing a thief from gaining access. For this reason, it's wise to choose a PIN you will remember but not one someone can guess easily such as your date of birth, Social Security number, or phone number.

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Phishing is the crime of trying to acquire personal information such as Social Security numbers, account information, credit or debit card numbers, and user names and passwords by fraudulent means. Phishers frequently use e-mails or instant messages, pretending to be someone in an official capacity and asking you to verify your information or password. However, legitimate service providers never ask for this information in this way, so such e-mails are almost always a hoax. You can protect yourself from becoming the victim of this form of ID theft by never answering such messages. You should contact your bank or other company directly if you doubt the authenticity of any request for personal information. You can learn more about Phishing at http://onguardonline.gov.

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Routing number is a nine-digit code assigned to each bank in the United States by the American Bankers Association. All transactions into and out of your account, including direct deposits and wire transfers through the Automated Clearing House (ACH), are transacted using this number plus your account number. The number appears at the bottom left corner of your paper checks and can be obtained directly from your bank.

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