3 Ways Direct Deposit Helps You Save
Published on 7/9/2020
What’s more annoying: waiting in line at the DMV or paying $20 in banking fees?
Believe it or not, according to a NerdWallet survey, consumers say paying banking fees is more annoying.
Some 84% of consumers surveyed said would do something to avoid money management fees. Fifty-one percent say they would take one simple step to save: setting up direct deposit.
Direct deposits are funds that are electronically deposited to your accounts. Rather than dealing with paper paychecks, income tax returns or Social Security payments, which can be lost or stolen, direct deposit is fast and worry-free.
It’s easy to set up. Just provide your employer with the name of your financial institution, the type of account, your account number, the routing number and a voided check. Be sure to read the direct deposit form completely. When you initially set it up, it could take a few payroll cycles for the changes to take effect, so don’t assume the funds will be available via direct deposit immediately. Make sure you follow up to check on the progress of your request.
In addition to it being secure, convenient and fast, setting up a direct deposit can also help you save money. Here are three ways.
Goodbye monthly maintenance fees: Many financial institutions will waive monthly checking account fees when you use direct deposit for your paycheck. According to GoBankingRates.com average monthly maintenance fees can run as high as $12.
Hello perks: Some financial institutions offer additional perks to make direct deposit more appealing. It can be in the form of lower interest rates on a loan or waiving other types of fees.
Free your mind: It’s hard to follow the sound advice of paying yourself first to build up savings. Let’s face it, either an unexpected expense pops up or you forget to transfer the funds. Direct deposit can solve this problem; you can set it up to automatically put a set amount into your savings account from each paycheck and the rest into your checking account. The next time you get a raise, adjust your direct deposit so your extra pay goes into a savings or retirement account. You can also arrange to have your tax refund direct deposited directly to your retirement or emergency fund account. It’s painless and you won’t be as tempted spend the money if you remove the option.