With emails, eStatements, online banking and mobile apps, paper paychecks can seem oddly out of place. Nearly 75 percent of American workers choose to receive paychecks by direct deposit, according to NACHA, the Electronic Payments Association. With the conveniences 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. No 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.
2. Extra Rewards Points
Some banks entice customers to add direct deposit to their checking accounts by offering extra rewards points. Citibank’s Thank You Rewards is one example.
3. Your 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.
4. Payments Can Post Before Holiday Weekends
Since direct deposit is processed early — normally 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 making time to visit the bank during holidays or the weekend, when lines can be at their longest.
5. Save Better 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. Improve 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.
Read: How to Save Money for Vacation From 11 Travel Experts
7. Pay Bills on Time Automatically
Some customers fear automatic bill pay can cause them to overdraft. To ensure you have money in your account when bills are 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.
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 dodging the ATM.
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 for using 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.
Related: How the Internet Killed Traditional Checking
12. Save Your Employer Time and Money
Direct deposit simplifies the payment and bookkeeping process for your boss. Writing, folding 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.
14. Increase Your Productivity
Direct deposit reduces employee absenteeism by eliminating your need to visit the bank on break. You can spend time on break 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.
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 your paycheck. You can sign up for direct deposit to receive expense reimbursements from your employer and 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 makes it easier for people 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.
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.
Direct deposit offers a variety of benefits for your finances. Streamline bills and savings with automatic transfers. Find new ways to manage your money to help you save and spend smarter.
This article originally appeared on GOBankingRates.com: 20 Perks of Direct Deposit
This article by Paul Sisolak first appeared on GoBankingRates.com and was distributed by the Personal Finance Syndication Network.
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