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What is an ATS account?
Answer by John Burnett and Andy Zavoina, BOL Gurus

Question: What is meant by ATS accounts? Is there a definition?

Answer by John Burnett: Prior to 1980, NOW accounts were not authorized nationwide.

Automatic Transfer Service or Automatic Transfer from Savings accounts were devised as a "work-around" to provide bank customers outside New England (where NOW accounts were permitted) the ability to pay interest on checking accounts. It's also helpful to realize that in the late 1970s, inflation had brought interest rates to high levels and banks were losing balances to alternative investments.

The scheme consists of two accounts -- a DDA and a savings -- working in tandem. The checking account maintains essentially a zero balance, and transfers are made to and from the savings account to keep the DDA balance at zero as deposits and checks are posted.

ATS accounts are permitted only to individuals (unlike NOWs, which can be held by many non-profits, government entities, and even corporations, if in a fiduciary or agency status). ATS accounts have lost their initial popularity because of nationwide access to NOWs.

Answer by Andy Zavoina: An ATS account is in Reg. D and is meant to be an interest bearing "from" account used for overdraft protection. PDF page 35 of this FRB document has ATS information and elsewhere you'll find call reporting information which can be tricky as compared to other accounts.

An ATS is similar to a NOW account in that it doesn't carry transaction restrictions and it does have ownership restrictions similar to a NOW. A NOW however allows ownership by some non-profit entities. ATS accounts are limited to individuals and sole proprietorships as a NOW would allow.

[Editors Note: As of 7/2/09, the separate limit of three per month for checks, POS debit card transactions, etc., has been eliminated, and those transactions are now only subject to the 6/month limit that applies to other restricted transfers and withdrawals.]

First published on 11/29/04

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