Direct Deposit and Direct Debit refer to what in consumer banking?

• A. A consumer banking technology where you are paid or paying someone electronically via ACH
• B. A form of investment
• C. The cost of money borrowed
• D. A savings certificate

Answer: (A)

Direct Deposit and Direct Debit are about electronic transfers of funds through the ACH network. Direct Deposit means money is deposited into your bank account, such as your paycheck or government benefits. Direct Debit means money is pulled from your account to pay a bill or service, like utilities or mortgage payments, after you authorize it. Both are convenient ways to move money without using cash or checks, and they hinge on electronic authorization and processing via ACH.

These concepts aren’t investments, which involve growing money by putting it into assets, nor are they the cost of borrowing (interest or finance charges). They aren’t savings certificates, which are fixed-term deposit products. So the best description is that Direct Deposit and Direct Debit are electronic payments—one putting money into your account, the other taking money out—settled through the ACH system.