Same Day ACH = Float No More

Remember the days when you could write a check and it would not clear your account for up to a week later? Consumers would enjoy that “float” period when they would still have use of the funds in their account, even though the funds were obligated to the recipient of the check. That float period has been shortening for years with efficiencies in the check processing industry and now another major erosion of float is upon us with Same Day ACH. ACH stands for the Automated Clearinghouse and it is the system by which the majority of electronic payments are transferred nationwide. For example, when you schedule an online payment from your credit card company’s website, chances are that payment will be processed via ACH. Prior to today that debit may have taken up to 48 hours to clear your account. Same Day ACH means just that, an ACH transaction originated today will now clear today. Same Day ACH for deposits to your account actually began in September 2016. You may have noticed it with your direct deposit payroll being credited to your account a day earlier than normal. On September 15, 2017, the Federal Reserve will start processing same-day ACH for payments or debits from your account. Retailers can opt to convert the checks you write to ACH by using the same system that is used for bill payments.  Payments you schedule via websites, telephone or mobile apps where you provide your account number could be affected by this change. So what does this mean for you?

Operate as though “float” is over. If you are scheduling a payment, make sure that you have the funds in your account prior to doing so. Make any necessary transfers in advance to ensure the payment will clear without overdrawing your account. Take advantage of payment site features to delay payment to a specified day in the future.

Use the checking account resources available to you. Review your monthly statements or account activity online for any current recurring debits from your account. Ask yourself, if those started to be withdrawn a day or two earlier, would there be funds be in the account to cover them? If not, contact the company and make arrangements to change the payment date. And lastly, set up a “Low Balance eAlert” on your checking account to notify you before it’s too late.

Consent to Overdraft Privilege.  If you have not already consented to Overdraft Privilege on your checking account to cover ACH transactions, consider doing so. Insufficient funds in the account due to timing issues could cause the payment to be rejected and cause additional fees from the originating company. Please click here for more information on Overdraft Privilege.

Same Day ACH may also be a non-event for you. Companies may continue to withdraw your recurring payments on the same day they always have, but keep in mind that most companies prefer to be paid as quickly as possible. Prepare for Same Day ACH today and contact the Credit Union for assistance.

 

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