I was asked to sign an “ACH authorization” for my payday loan. What is that?
Answer: An ACH authorization gives the lender permission to electronically take money from your checking or savings account when your payment is due.
Know exactly how much will be deducted from your checking account and when. Read your loan documents carefully before signing them. Make sure you understand:
- How much would be withdrawn from your account
- Whether it's the full amount you borrowed or a renewal fee
- When the withdrawal would occur
- How you can revoke, or cancel, your ACH authorization
If you don't have enough money in your account when the lender attempts a withdrawal, your bank or credit union might charge you an overdraft fee to cover the payment.
If your bank or credit union does not cover the payment and the lender can’t deduct the full amount due, your loan will be delinquent. This might result in the lender charging you a late fee, and your bank or credit union charging you a “bounced check” or non-sufficient funds fee as well.