Getting funds into your bank account faster and more securely might help you save money. However, you’re not the only one that could see some extra cash each month. Banks offer numerous benefits for setting up direct deposit for your paychecks.
The cost of electronic transfers is less than paper check deposits, so banks save money by processing direct deposits. Financial groups also tend to prefer accounts with increasing balances, and direct deposit makes these savings more likely to occur.
Most banks offer a few perks for opening direct deposit, such as:
- Free checking and savings accounts
- Cashback offers
- Free money
- Unlimited transactions
- Higher interest rates for savings accounts
- Overdraft protection
- Stocks and cryptocurrency
By setting up direct deposit, you could grow your savings and get into a better financial state. Here are six ways you could save money by using direct deposit.
- Easier to Budget
Direct deposit makes budgeting a breeze by keeping your spending in check. A direct deposit card can prevent you from spending more than you earn. You can deposit your paycheck onto a prepaid card, so you only use the funds without having bank account fees.
- Automate Your Savings
You can also increase your savings by having a portion of your paycheck go into a savings account.
You can plan how much of your checks cover expenses, like rent, groceries, and loan payments.
- Prevent Late and Overdraft Fees
If payday is close to a bill due date, you could avoid late and overdraft fees by receiving your money earlier to cover your expenses. Some banks deposit paychecks earlier than payday when account holders have automatic direct deposits. You may be eligible to get your wages up to two days sooner with direct deposit cards and at local banks by establishing consistent pay.
A financial baseline – an amount you do not typically withdraw less than – lowers your risk of account deficits. Banks typically charge overdraft fees if you withdraw more money than what is in your account. You can avoid these fees by keeping a financial cushion and setting payment of important bills for payday.
- Avoid Mistakes
Some direct deposit apps have account numbers that are better suited for secure payments, such as paychecks or government benefits. Others use phone numbers, emails, and communication apps, which can decrease the risk of sending payments to the wrong person. Plus, apps that have usernames increase privacy and anonymity.
- Bypass Credit Card Fees
A prepaid card with direct deposit has all the benefits of shopping with a debit or credit card. However, they do not require a credit check and usually do not have a required minimum balance. The Netspend direct deposit card, for example, only requires identification verification.
- Limit Your Transaction Fees
Most apps do not have fees for transferring money, although fees may be subject to transaction type and recipient. For instance, a PayPal direct deposit between friends and family is free, but commercial transactions have a service fee.
Cash App, Venmo, Zelle, Apple Pay, and Google Pay have free non-commercial transitions. However, apps may charge fees for transactions involving credit cards, foreign countries, and expedited or instant deposits and withdrawals.