A payment automatically sent from the bank or credit card account to one of the billers is, in essence, what it sounds like. A debit card, credit card, checking account, savings account, or money market account can all be used to enable an automated bill payment. According to the payment schedule, the biller automatically collects the amount required.
Depending on how you pay, automated payments can be handled in one of two ways.
First, ACH transactions may be used to make automatic payments. Electronic funds transfer, or EFT, to or from a bank account is ACH or Automated Clearing House.
Using a credit card is the second technique to set up automated payments. For instance, you might set up an automated payment to allow the monthly expenses for the Netflix or Hulu membership to be deducted from the credit card.