How Direct Deposit into a Savings Account Could Help You Reach Your Goals

Are you still getting paper paychecks or only direct depositing to your checking account? You may also be able to direct deposit into savings, eliminating the need to make additional transfers from your checking to your savings account.

I don’t know about you, but one of the best strategies I know for making progress toward financial goals is automation. Direct deposit does just that — builds up your savings with every paycheck after you make the decision just once to set it up.

After you decide how you need to allocate your paychecks among checking and savings accounts, setting up direct deposit is fairly simple. Here’s how it works.

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Earn up to 4.75% APY

Earn up to 4.75% APY¹ <p>LevelUp Rate of 4.75% Annual Percentage Yield (“APY”) is applied to the full balance of LevelUp Savings accounts that receive a total of at least $250 in deposits during the Evaluation Period. Otherwise, accounts will earn the Standard Rate of 3.75% APY. Interest payments, account bonuses, account credits and reversals or refunds from the bank are not considered deposits for rate evaluation purposes. All LevelUp Savings accounts earn the LevelUp Rate at account opening and continue to earn the LevelUp Rate until the First Evaluation Period, to provide an opportunity to set up deposits. </p> <p>An Evaluation Period is a statement cycle. The First Evaluation Period will be the third statement cycle after you open your account, with any rate change becoming effective the next statement cycle. For example, if you open in August, the first Evaluation Period would be October with any rate change effective in November. Any rate changes will take place on the second business day and will be based on deposits in the previous statement cycle. </p> <p>APY accurate as of 11/25/2024. Rates are variable and subject to change at any time without notice, at the sole discretion of the bank. Fees may reduce earnings. $0 minimum opening deposit.</p> when you open a new LevelUp Savings account and deposit $250+ per month. Member FDIC.

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SoFi Checking & Savings - Earn Up to $300 When You Set Up Direct Deposit

Earn up to 4.00% APY² <p>New and existing Checking and Savings members who have not previously enrolled in Direct Deposit with SoFi are eligible to earn a cash bonus of either $50 (with at least $1,000 total Direct Deposits received during the Direct Deposit Bonus Period) <b>OR</b> $300 (with at least $5,000 total Direct Deposits received during the Direct Deposit Bonus Period). Cash bonus will be based on the total amount of Direct Deposit. Direct Deposit Promotion begins on 12/7/2023 and will be available through 1/31/2026. Full terms at <a href="http://sofi.com/banking">sofi.com/banking</a>. SoFi Checking and Savings is offered through SoFi Bank, N.A., Member FDIC.</p> <p>SoFi members with Direct Deposit can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Direct Deposit amount required to qualify for the 4.00% APY for savings (including Vaults). Members without Direct Deposit will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Interest rates are variable and subject to change at any time. These rates are current as of Dec. 3, 2024. There is no minimum balance requirement. Additional information can be found at <a href="http://www.sofi.com/legal/banking-rate-sheet">http://www.sofi.com/legal/banking-rate-sheet</a></p> and collect up to a $300 cash bonus with direct deposit or $5,000 or more in qualifying deposits.³ <p>SoFi members with Direct Deposit or $5,000 or more in Qualifying Deposits during the 30-Day Evaluation Period can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. Members without either Direct Deposit or Qualifying Deposits, during the 30-Day Evaluation Period will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Only SoFi members with direct deposit are eligible for other SoFi Plus benefits. Interest rates are variable and subject to change at any time. These rates are current as of Dec. 3, 2024. There is no minimum balance requirement. Additional information can be found at <a href="http://www.sofi.com/legal/banking-rate-sheet">http://www.sofi.com/legal/banking-rate-sheet</a></p> FDIC Insured.⁴ <p><b>SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per legal category of account ownership, as described in the FDIC’s regulations. Any additional FDIC insurance is provided by the SoFi Insured Deposit Program. Deposits may be insured up to $2M through participation in the program. See full terms at <a href="http://sofi.com/banking/fdic/terms">SoFi.com/banking/fdic/terms</a> See list of participating banks at <a href="http://sofi.com/banking/fdic/receivingbanks">SoFi.com/banking/fdic/receivingbanks</a></b></p>

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Can you direct deposit into a savings account?

You can set up direct deposit into different types of bank accounts, including savings as well as checking. All you need for direct deposit is to provide details to your employer identifying the specific account or accounts where you’d like to send your money. You might specify a dollar amount or percentage if splitting paychecks among two or more accounts.

If you’re going to direct deposit into a savings account, you’ll have to provide the financial institution’s name and routing number and your account number to your employer. You might also need to provide your Social Security number.

What is direct deposit?

Direct deposit is a simplifying measure that allows you to receive your paychecks automatically into an eligible checking or savings account. Given the percentage of people working remotely who might not even set foot in the state or country where their employer is, it’s extremely useful. No need to deal with paper checks and in-person visits to your financial institution.

Fill out your employer’s paperwork, which is simple and quick and only needs to ensure your money goes to the correct account. Decide how much of your paycheck you require in checking for everyday expenses versus how much you want to sock away for the future and for emergencies.

Most banks also offer direct deposit options, and some even allow you to enroll in early direct deposit. This makes your paycheck available in your deposit account up to two business days earlier. If you need your money even faster, consider using a paycheck advance app.

The advantages of direct deposit into a savings account

Convenience

Considering you don’t have to do much more than fill out a few bank details, direct deposit is a convenient way to transfer your paycheck into your savings or checking account (or both). The setup itself doesn’t typically take more than a few minutes.

I’m old enough to remember the hassle of waiting for a check to arrive, driving to the bank, and filling out a deposit slip to deposit the funds. As nice as the tellers were, it was always a hassle. Direct deposit takes away that inconvenience.

The convenience factor means direct deposit also works regardless of location. If you’re traveling or temporarily relocated, you don’t need to stress over whether you’ll get your money when you need it. It will appear in your designated bank accounts as scheduled.

Safety

While people still send checks via the mail, it can be a security risk. Your check could be delivered to the wrong address or someone could even steal it right out of your mailbox. Unless you’re watching it like a hawk, you could be vulnerable to thieves looking to steal your money and your personal information.

That isn’t to say that online banking information is completely safe from hackers. However, financial institutions typically have security measures in place to prevent data breaches. This includes requiring multiple-factor authentication and passwords to access your online account.

Speed

If you had the choice to receive your money sooner rather than later, you’d always pick the faster option, right? Direct deposit, whether into checking or savings, ensures you typically receive access to your funds as quickly as possible.

When it comes to your money, time is often of the essence, and mail delays could prove very costly if you end up overdrafting your account. Using direct deposit enables you to more reliably count on your money being deposited on time, with no unnecessary waiting.

Save Automatically

Some direct deposit programs allow you to split your paychecks between multiple accounts. This is great because you can automate your savings.

It’s easier to set up automatic savings and forget about it, rather than rely on yourself to transfer funds from checking into savings every month. Even if it feels like a hardship to give up whatever amount you allocate for savings, chances are good that once it’s on direct deposit, you might not even miss that money.

Direct deposit into savings enables you to save money for specific goals, including saving for a rainy day emergency fund, a car, or a house. This automated approach can be more effective than relying on your own willpower.

You can go through your budget and decide how much you want to save each pay period. For example, you might have 15% of every check directly deposited into a savings account and 85% deposited into checking.

If you’re also automating investments, perhaps you have 70% of your money going into checking, 15% into savings, and 15% into a brokerage account. This covers your main financial bases without you having to think much about it on a monthly basis.

How to set up direct deposit into a savings account

When signing up for direct deposit, choose one of the best savings accounts and talk to your employer. Here’s how you typically get started:

1. Speak to your employer’s payroll department to learn their process for direct deposit.
2. Follow your employer’s instructions, which may include signing in to an online portal.
3. If your employer doesn’t use an online portal, you may have to fill out a direct deposit form and submit it to your human resources department.
4. You’ll need certain information, including your name and address, bank account and routing numbers, signature, and possibly a voided check.
5. Select the account you want your money deposited into. You may also be able to split your paycheck between multiple accounts.

If your employer only allows you to direct deposit into one account, you can try the easy workaround that I use: internal recurring transfers at your bank. Most banks have a recurring-transfer option, so if you direct deposit your full paycheck into checking, you can automate savings with a transfer into one or more savings accounts on a weekly, monthly, or quarterly basis.

FAQ

Direct deposits into savings accounts: bottom line

Direct deposit is often the quickest and easiest way to deposit paychecks directly into a checking or savings account. You might decide to deposit into one account over the other, depending on whether you want easy access to your funds or to help build your savings.

You can enjoy convenience and speed with direct deposit, removing unnecessary stress that can come from waiting for your money. Check out our list of the best checking accounts to find an account that meets your personal finance needs.

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