---
title: "ACH / automatic payment (auto-pay): definition | Desert Rock Capital"
url: "https://www.desertrockcapital.com/glossary/ach-auto-pay"
description: "ACH is an electronic network used to move money between bank accounts, and auto-pay is an arrangement that uses it to debit scheduled loan or bill payments."
---

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# ACH / automatic payment (auto-pay)
All lending terms
Definition

ACH is an electronic network used to move money between bank accounts, and auto-pay is an arrangement that uses it to debit scheduled loan or bill payments automatically. You authorize the withdrawals in advance.

ACH stands for Automated Clearing House, the United States network that processes electronic transfers between bank accounts, including direct deposits and direct payments. Auto-pay, or automatic payment, is a setup in which you authorize a lender or biller to withdraw each scheduled payment from a designated bank account on its due date through ACH. This can help payments arrive on time and reduce the chance of a missed due date, and some lenders offer it as a payment option. The authorization can generally be managed or canceled by the account holder under the agreement and applicable rules. If an ACH withdrawal is returned for non-sufficient funds, a returned-payment fee may apply.

Source: [Consumer Financial Protection Bureau](https://www.consumerfinance.gov/ask-cfpb/what-is-an-ach-transaction-en-1065/). This definition is general educational information, not legal or financial advice.
Related

- [Returned-payment (NSF) fee](/glossary/returned-payment-fee)
- [Loan FAQs](/faqs)
- [Personal loans](/services/personal-loans)
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