Certified Medical Administrative Assistants (CMAA) Practice Exam

What is the term for regular withdrawal of funds from one account and transferring them to another?

1. Automatic funds transfer

2. Direct payment

3. Recurring deposit

4. Batch processing

The correct answer is: Automatic funds transfer

The term for the regular withdrawal of funds from one account and transferring them to another is "automatic funds transfer." This process allows individuals to set up transactions that occur on a predetermined schedule, usually at regular intervals such as weekly or monthly. Automatic funds transfers are commonly used for tasks such as paying bills, saving a portion of income, or transferring funds between personal accounts. This method adds convenience and efficiency to financial management by ensuring that payments are made on time without the need for manual intervention each time. This is particularly useful for recurring expenses like rent or loan payments, where timely payments are essential to avoid penalties or service disruptions. While other terms may seem relevant, they do not specifically capture the essence of the automatic scheduling and transfer of funds. Direct payment refers to a singular transaction rather than a repetitive process, while recurring deposits pertain more to the regular addition of funds into an account. Batch processing typically relates to the handling of multiple transactions at once, not the regular transfer of funds. Thus, automatic funds transfer is the most accurate term for the described activity.