DDA debit refers to a direct debit authorization while DDA accounts refer to a demand deposit account. Importantly, these terms vary by jurisdiction. For example, if you recently opened a US bank account without an SSN or ITIN, you will likely see direct debit mandate or ACH authorization instead of DDA debit.
Not surprisingly, these are two very different concepts, both of which will be covered in this article.
We will also be answering a number of questions related to both DDA debit and DDA accounts.
This article is part of our free series on how to send money online through bank transfers, direct deposit, and more – click here to unlock free access now.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- DDA Debit
- DDA Account
- DDA Account Types
- DDA Deposit vs Term Deposit
- Frequently Asked Questions
- Ready to Explore Your Options?
DDA Debit
DDA debit refers to “direct debit authorization”, which is an authorized withdrawal from an individual’s bank account by a third party. Not surprisingly, DDA debits are common across a wide range of services, including subscription payments, regular service charges, and more. Depending on the service being provided, you may need to contact your financial institution to cancel a DDA debit authorization.
It’s important to note that different jurisdictions may use different terms when describing a DDA debit authorization. For example, in the United States, a DDA authorization is often called a direct debit mandate or an ACH authorization.
Do You Want Our Free Non-Resident Banking Guide?
Sign up here to receive our Free Non-Resident Banking Starter Guide and weekly updates on the best account opening options available:
DDA Account
DDA account types refer to “demand deposit accounts,” which are bank accounts where funds can be withdrawn without notice. The DDA account holders have the total authentication and power to operate a debit account. They need no prior notice before the utilization of the DDA debit account.
In other words, account holders can access their full account balance at any time without notifying the bank. That said, it’s important to note that many banks impose restrictions on transaction activity. Likewise, banks typically charge fees when the balance of the account falls below certain thresholds.
With this in mind, before withdrawing the large amounts (or the entire balance) of a DDA account, you may want to contact your bank or review your account agreement. Otherwise, you could end up paying high fees for falling below specified account balances or withdrawing more than your account agreement permits.
DDA Account Types
DDA account types include any account where deposits are not held as a term deposit, certified deposit, or investment. In other words, checking accounts, savings accounts, and money market accounts are all considered DDA account types.
Checking Account
Checking accounts are DDA account types because they allow the account holder, which can include individuals and businesses, to withdraw their funds whenever they need access to their money. That said, most major banks do have minimum balance requirements if the account holder wants to avoid monthly maintenance fees.
Savings Accounts
Savings accounts are also DDA account types because they allow the account holder, which can include individuals and businesses, to withdraw their funds whenever they need access to their money. That said, savings accounts typically have restrictions on transaction activity and can be limiting in terms of the number of transactions that an account can have during a given period (e.g. week or month).
Money Market Accounts
Money market accounts are the third type of DDA account because they allow the account holder, which can include individuals and businesses, to withdraw their funds whenever they need access to their money. When compared to traditional savings accounts, money market accounts generally offer higher interest rates to depositors.
DDA Deposit vs Term Deposit
The main difference between a DDA deposit account and a term deposit account is that a DDA deposit account is highly liquid and can be accessed by the account holder at any time while a term deposit is committed to the bank for a fixed period.
That said, term deposit accounts can include short-term deposits, and depending on the type of deposit and bank most term deposits can be accessed immediately, though penalties will apply.
Frequently Asked Questions
Below is the most common question we receive from people looking to better understand DDA debit. If you have further questions you would like answered, don’t hesitate to get in touch with us directly.
What Does DDA Mean on a Bank Statement?
DDA on a bank statement typically refers to a direct debit authorization that has been charged to your account. In short, this is a charge that you have agreed to in advance, often recurring and usually on a subscription basis. Examples of DDA charges that may appear on a bank statement include Netflix, Amazon, Apple TV, and similar services.
Do You Want Help Opening a US Bank Account?
If so, you can get access to GlobalBanks USA (our dedicated US account opening service) in just a few clicks.
GlobalBanks USA is a 100% personal account opening solution. It provides direct access to our team of US banking experts.
When you join, you receive…
+ Expert suggestions on where to open US bank accounts.
+ Step-by-step support to navigate US account opening.
+ Direct introductions to helpful and responsive bankers.
+ Plus, detailed guides to maximizing the value you get from your new US bank account.
And “yes!” GlobalBanks USA helps foreigners and non-resident individuals open accounts.
In fact, GlobalBanks USA even helps non-resident US LLCs and foreign & offshore entities.
Use the link in our menu above to learn more about GlobalBanks USA. Or, contact us directly with any questions!
