Direct Deposit Saves You Money

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A recent survey highlighted by CNN Money showed that only 59% of those aged 45-64 used direct deposits, compared to 72% of seniors (65+). The three reasons they listed, as to why they don’t use direct deposit, were they liked going to the bank to cash their check (21%), they don’t trust it (19%), and they preferred receiving a paper check (18%). There are a lot of reasons why everyone should be using direct deposit, especially now that all the kinks have been worked out.

It saves you money to have the money directly deposited. Everyone saves money when you use direct deposit. Your company doesn’t have to mail you a check (though sometimes they mail you a paystub anyway), you don’t have to drive to the bank or take time out of your day to cash the check, and your bank doesn’t need to process a paper check (though this was made cheaper by Check 21).

It can help automate your savings. Many employers offer the ability to direct deposit to multiple banks. Send a steady percentage each month to your emergency/vacation/slush fund and the rest to your primary bank account. You’ll soon find yourself flush with cash you didn’t even really think you were saving.

Direct deposits don’t get lost. The USPS is pretty reliable but for anyone depending on their next paycheck, you don’t want to be that one out of a few hundred thousand that gets unlucky and has their paycheck lost or mangled beyond cashability. Also, let’s say you get the check but can’t get to the bank… what if you lose it? Getting a payroll check cancelled and reissued can cost you a lot of time and potentially some money (for the stop payment).

You earn interest faster via direct deposit. This is less of a financial reason than a psychological one because the difference in interest is negligible but if you direct deposit, you earn interest the moment the money hits your account. There is no waiting for the postal carrier, the drive to the bank, the waiting period for the check to cash, etc.

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3 Responses to “Direct Deposit Saves You Money”

  1. Though direct deposit can do all of these things, it can also help you pay your monthly bills. If you figure out how much your monthly fixed costs are (rent, gas, electric, debt payments, etc.) you can have your employer split the direct deposit into two accounts. The first account gets the amount necessary to pay your basic bills, and the other gets the rest of the money. You can set up the first “bill payment” account to automatically pay your monthly bills, thereby automating the process without cutting into the money you use for your living expenses. We’re discussing this and other Resolution Helpers all month on The Debt Podcast.

  2. Rebecca says:

    How do I get my rebate check direct deposit to my bank if I have filded my taxes in January and did not but direct deposit I used H&R block

  3. echidnina says:

    I love direct deposit for the fact that I can DD to different accounts. I have different percentages of my check go directly to my checking account, my “fun money” account, and my savings.

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