What Does a Draft Withdrawal Mean on a Bank Statement?

Many individuals find it an inconvenience to write checks to pay bills. To accommodate customers and facilitate the bill payment process, many banks have implemented automated bill payment systems that you can use with either your checking or savings account. If you find a draft withdrawal on your bank statement, your bank has deducted funds from your bank account to pay an electronic bill. Draft withdrawals require you to set up the electronic payment with the business that issues the bill. However, once you have set up the draft withdrawal, your bank will automatically deduct the funds from your bank account according to the payment schedule.


Before you can use draft withdrawals to automatically pay a bill, you have to make sure the business that issues the bill accepts electronic payments. The business will require you to fill out an authorization form that includes information about your bank account including your bank account number and bank routing number. Businesses typically allow you to complete either a paper or electronic authorization to set up the draft withdrawal. Some companies also require you to provide a voided check during the setup process. Once you have enrolled the payment, the business will automatically deduct the payment from your bank account every billing period, normally once per month.

Checking and Savings Account

Banks have varied policies regarding attaching an account for an automatic draft withdrawal. Most banks use the checking account as the primary source of funding for draft withdrawals. However, some banks also allow you to use savings accounts for draft withdrawals. Also, since a draft withdrawal automatically withdraws funds from your account according to a fixed schedule, you will need to make sure you have sufficient funds in your bank account to cover the withdrawal. Failure to have sufficient funds in your account will result in overdraft fee charges from your bank. Additionally, your bank may refuse the charges if you do not have sufficient funds in your account to cover the transaction.

How Does It Work?

After setting up electronic payments, most businesses will continue to send you periodic bills as normal in the mail. You should retain these bills for your records. However, you will not need to physically pay these bills. Your monthly bank statement will show the amount of the draft withdrawal and the date of the withdrawal. You should also check both your bill and bank statement every month to make sure that your bank debited the correct amount from your checking account and that the company to which you pay the bill properly credited your account for the payment.

Paperless Billing

Along with the automatic bill paying system many companies now offer paperless billing options. With paperless billing, you will receive an electronic copy of your bill each month instead of a paper copy. Electronic billing is an environmentally friendly option that still allows you to easily review and store your monthly billing statements. Many banks also offer electronic monthly statements.


  • "First Bank Account and First Investments Smarts (Get Smart With Your Money)"; Jeri Freedman; 2009
  • "Your Checking Account: Lessons in Personal Banking"; Victoria W. Ritz; 2006

About the Author

Brian Bass has written about accountancy-related topics and accounting trends for "Account Today." He works as a senior auditor specializing in manufacturing and financial services companies for one of the Big 5 accounting firms. Bass hold a master's degree in accounting from the University of Utah.