Description

• Each month a bank debits your account for a prearranged amount. The amount might always be the same or can vary per month. The bank transfers the money to a third party.
  
  

Purpose

• This agreement is used in forming an agreement between you and a creditor. The bank is a party involved making the transaction, but the bank is not affected by the transaction in any way. The bank automatically deducts an arranged amount from the specified account and pays your recurring bill each month.
  
  

Process

• You contact a creditor and arrange a payment schedule with them. You discuss payment amount and date, and you give the creditor the routing number of your bank along with the account number. The agreement stays in effect until one party terminates it. If you decide to cancel the agreement, you do so by contacting the creditor.