20 Perks of Direct Deposit

Here's how direct deposit can take your finances to the next level.

With emails, electronic statements, online banking and mobile apps, paper paychecks can seem oddly out of place. Out of all American workers, 82 percent choose to receive paychecks by direct deposit, according to NACHA, the Electronic Payments Association. With the conveniences and benefits of direct deposit and certain incentives offered by banks, it’s no wonder customers are moving away from paper checks. See how direct deposit can make managing your day-to-day finances easier.

Read: The First Thing You Should Do With Every Paycheck

20 Reasons to Choose Direct Deposit

1. Money Is Available Sooner

With direct deposit, your paycheck clears immediately and goes straight into your bank account. You might even have your money payday morning, regardless of the time your employer normally hands out paychecks.

2. Payments Can Post Before Holiday Weekends

Since direct deposit is processed early — usually, the day before you’re paid — you can get your paycheck early if a holiday falls on payday. Direct deposit can even help you avoid having to visit the bank during holidays or the weekend when lines can be at their longest.

3. Earn Extra Rewards Points

Some banks entice customers to add direct deposit to their checking accounts by offering extra rewards points. A couple of examples are Citibank’s Thank You Rewards and the customer bonus offered by some Bank of America credit cards.

4. Avoid Monthly Maintenance Fees

Because direct deposit eliminates the cost of check handling and increases cash flow for the bank, you can avoid certain banking fees. Set up your paycheck to be deposited directly and your bank might waive its monthly maintenance and minimum balance fee for you. You might even qualify for better interest rates.

5. Save More Each Pay Period

Direct deposit can have a positive effect on how you manage your money. By setting up your direct deposit to drop money into different accounts, like your savings and an emergency fund, you can automatically transfer funds to savings so that you don’t forget.

6. Automatically Pay Bills on Time

Some customers fear automatic bill pay can cause them to overdraft. To ensure you have money in your account when bills need to be paid, set up automatic payments to occur a few days after each pay period. You can work with credit card companies and other businesses to move your payment due dates to more convenient days of the month to help you avoid overdraft fees.

7. Improve Your Budgeting Skills

If you’re saving up for a vacation or car, direct deposit can help you better budget for the expense. By limiting funds for a vacation to one account, for example, you know precisely how much you can afford to spend while on your trip.

8. Reduce the Temptation to Spend Money

With a physical paycheck out of the equation, you’re less likely to waste it frivolously on things you don’t need. Depositing checks in person can tempt you to take out a bit of cash to carry in your pocket. Avoid the temptation altogether by ditching the paper and sticking to direct deposit.

9. Setting Up Direct Deposit Is Easy

Making the switch from paper checks to direct deposit is easier than you might think. To sign up, request a direct deposit form from your employer. You will need to provide your bank name and branch, plus your account and routing numbers.

Before you sign up, consider how much money you can afford to put into savings or other accounts. You can easily allocate a certain percentage of your paychecks to other accounts.

10. Direct Deposit Is Free

Your pay is not reduced if you use direct deposit. You won’t encounter fees or other charges that dock your paycheck. In fact, you can save time and money by eliminating regular trips to the bank.

11. Cut Paper and Ink Use

Direct deposit reduces your environmental impact by decreasing the amount of paper and ink you use. You can double your efforts by signing up for paperless statements for other accounts, too.

12. Save Your Employer Time and Money

Direct deposit simplifies the payment and bookkeeping process for your boss. Printing — or writing — and handing out checks is labor intensive and leaves more room for errors. Your employer will also spend less on paper, ink and other materials needed for paper paychecks.

These savings multiply as more employees switch to direct deposit. By reducing the workload for your HR department and boss, you can free up their time and budget to focus more on providing employee services.

13. Eliminate the Fear of a Lost Check

If your employer traditionally mails out checks, direct deposit can spare you the worry of a lost check. Mail can be delayed or you might be out of town on payday. A direct deposit ensures you always receive your money on time.

Read: Every Type of Check Fraud You Have to Worry About

14. Increase Your Productivity

Direct deposit reduces employee absenteeism by eliminating your need to visit the bank on breaks or lunches. Instead, you can spend that time focusing on relaxing or gearing up for the next item on your to-do list.

15. Leave Work on Time

Some employers pass out paychecks at the end of the day or lunchtime to avoid distracting employees. Passing out checks at these hours can frustrate employees who are tied to their desks waiting for their paychecks.

16. Switch Banks With Ease

Switching banks is a simple process with direct deposit. When you’re ready to move banks, simply fill out a new direct deposit form with your employer to reroute paychecks into your new account. Remember to rework automatic bill pay accounts to withdraw from your new account, as well.

17. Increase Safety and Security

Because you don’t have to carry around a physical check, there’s no chance of it being lost or stolen. By eliminating any chance you have of losing your paycheck, you don’t have to worry about the delay or embarrassment involved in getting a check reissued by your employer.

18. Direct Deposit Is Flexible

Direct deposit isn’t just for paychecks. You can sign up for direct deposit to receive expense reimbursements from your employer ans well as travel and cash advances. You can also use direct deposit to build your retirement fund and receive income tax returns and unemployment benefits.

19. Get Easy Access to Financial Information

Online and mobile banking make it easier for you to review pay stubs and other financial information. You won’t need to worry about keeping a drawer full of pay stubs to keep tabs on your payroll history, it’s all saved digitally for you.

20. Direct Deposit Is Confidential

Since direct deposit moves your funds discreetly from your employer to you, nobody can sneak a peek at your financial information. Your personal finances get the privacy they deserve.

Read: How to Avoid Overdraft Fees