Paying your electric bill or mortgage online may get a whole lot faster.
That should be welcome news if you’ve ever been hit with a late fee after paying a bill on the due date, only to see it post to your bank account the following day.
But Automated Clearing House payments, or ACH, now can be processed in a single day under a rule that went into effect Sept. 15. That means you may be able to initiate electronic payments of a credit card, utility or loan and have the funds pulled from your account and credited the same day.
The functionality won’t be forced upon companies and utilities that accept your electronic payments. You’ll have to contact your biller to find out whether it’s collecting same-day payments. If it is, taking advantage of this service may change the way you budget your money and manage your finances.
When you purchase items with a debit card, those charges instantly post to your checking account. But payments made through the ACH network, which handles most of the money transferred electronically in the country, used to be processed overnight and posted to a consumer’s account the next business day, says Jane Larimer, chief operating officer of NACHA, formerly the National Automated Clearing House Association. Voting NACHA members approved a rule that allows for same-day ACH payments.
Now that accounts will be updated on the same day as payment, you’ll have a better sense of how much money is at your disposal. And you may no longer worry about paying late fees or overdrawing accounts.
“One of the reasons behind the effort for faster payments was actually to try to reduce overdraft fees,” says Thaddeus King, officer for the consumer finance project at the Pew Charitable Trusts. “If all of your payments are occurring pretty much in real-time and you have access to your account information, then you’ll know if you have enough money.”
If you primarily schedule payments for future dates, that’s still possible. But with the ability to get credit for same-day payments, you can decide which bills to pay first.
“There are households out there that are always constantly juggling and this gives them some real-time control over when the payments actually go out of their account,” says Jeanne Hogarth, vice president at the Center for Financial Services Innovation.
Different types of electronic payments – including direct debit transfers and electronic checks – can be processed on the same day. That won’t be true, however, for transactions above $25,000 and international payments.
Electronic credits – like direct deposit – already can be processed the day they’re sent. By March 2018, the same-day ACH implementation will require money coming into accounts electronically to be available to consumers by a 5 p.m. deadline.
If your biller collects same-day payments (and you agree to allow them), your financial habits may need to shift. Check bank account balances often to make sure you have enough funds for last-minute payments.
“Don’t make a payment when the money isn’t in your bank account,” Hogarth says. “Being on top of your bank account, if you’re right on that margin, is really, really important.”
Decide which payments to make the day they’re due. Waiting until the due date to pay your mortgage loan instead of leaving it as a scheduled payment may not make sense.
If you see a payment you didn’t authorize or there’s a mistake, report it immediately.
“As long as they notify the bank within 60 days that the transaction was unauthorized, they will get their refund,” says Lisa Tiller, assistant vice president at First Bank & Trust Company, which is based in Lebanon, Virginia.