ACH Transaction fees and the Hidden Costs of Check Processing

Ach transaction fees are an extremely important factor for all banks and credit unions.  These charges are associated with the Automated Clearing House (ACH) system, which is an electronic network for financial transactions in the United States.  When customers link their bank accounts with one another, the ACH is used to carry out these transactions.  This can include direct deposits, payroll or student loan payments.  ACH transaction fees are the costs that banks incur when they process these transactions for their customers.

The ACH system was created in 1970 to allow financial institutions to move their customer's money easily and efficiently.  For example, if you direct deposit your pay check to your account, this is an ACH transaction.  You can also use the ACH system to move funds between your own accounts at different institutions.  For example, if you want to transfer money from one account to another at a different bank, you could do this via the ACH System as well.

The types of transactions that the ACH system can be used for are limited.  However, if you are an online bill pay user, this is most likely how you make your payments.  While it may not be obvious to individual consumers, there are fees associated with each of these types of transactions.  They are the same whether you use a check, an electronic payment, or a debit card.

ACH transaction fees are assessed by the bank that processes the transactions.  The fee is typically a small percentage of the total transaction amount.  For example, if you direct deposit $1,000 into your account, your bank may charge 25 cents for that transaction.   In the same way, if you direct deposit your paycheck of $1,000 to your account, you'll also pay a fee at most banks.  It is important to note that these fees are not charged by or paid to the consumer's own bank or credit union, but instead they are assessed by the institution that processes the transaction.

These fees can become a problem for seniors, who may find themselves dedicating a large portion of their budget to ACH transaction fees each month.  For example, if you have direct deposits from your social security check into your account every month, that is 12 transactions requiring an ACH fee.  If you're paying bills online, it is likely that there are additional monthly ACH fees.  If you're paying for healthcare or insurance online, these transactions often require an ACH fee as well.  When you tally up the cost of all transactions each month, costs can really start to add up.

Fortunately, not every financial institution charges ACH fees.  In fact, some banks do not charge any fees for ACH transactions.  This is something that consumers should research before signing up for a new bank account.  If you are already signed up with a bank that charges ACH fees, it may be worth your time to explore other options.

The bottom line is that ACH transaction fees are a reality for all consumers who use electronic banking services.  While these fees may seem small, they can really add up over time.

If you're looking for a new bank account, be sure to research the ACH fees charged by each institution.

You may also want to consider other banking options such as credit unions, which do not charge these types of fees.

If you're an individual who makes a lot of online transactions, there are ways to reduce the number of ACH transaction fees that you pay.  Instead of making monthly payments to your utility or cable company using your checking account, sign up for automatic bill pay through your account.  This will ensure that you only make one ACH transaction per month, instead of 12 or more.

Some financial institutions offer services to their customers that can reduce the number of monthly ACH transactions.  For example, some online banks offer free bill pay with certain accounts.  If you already have a bank account and are paying bills online, be sure to ask your bank about this service.