Do you receive your paycheck via direct deposit? Have you ever wondered what time it actually hits your bank account? It’s important information to know, especially if you have automatic deductions coming out of your account around the same time.
Here’s a closer look at how direct deposit works, when it hits your bank account, and more.
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What Is Direct Deposit?
Direct deposit, also known as an Electronic Funds Transfer or EFT, transfers money from the payor’s account to the recipient.
The Automated Clearing House (ACH) is used to send direct deposit payments. The highest levels of encryption are used to keep your money secure and your personal information safe.
Direct deposit is used by employers, government agencies, and many other entities to send payments to employees, beneficiaries, and customers.
What Days Can You Receive Direct Deposit?
Direct deposit runs on the same schedule that the Federal Reserve runs on. That means it can only arrive in bank accounts Monday through Friday – direct deposit entries cannot be posted on weekends or holidays.
For example, if you expect to receive a direct deposit on a Monday, your bank account will not show that deposit earlier. If you’re out of money and need to buy something, you’ll want a backup plan, such as an emergency fund.
If your payday falls on a weekend or a holiday, most employers will ensure that your direct deposit arrives on the previous business day. In other words, if your regular payday is Friday, but Friday is a holiday, you should receive your payment the day before, on Thursday.
What Is Early Direct Deposit?
Some financial institutions offer early direct deposit. Here’s how it works:
- Banks usually get notified in advance that a Direct Deposit is coming into a bank account.
- This lag time (often called a “float”) helps the bank prepare for the incoming funds and double-check the details of the incoming deposit.
- The account is credited for the direct deposit on the date stipulated by the sender of the funds.
- Banks with early direct deposit will forego that float period and credit the funds to your account early instead of waiting for the date recommended by the sender.
Not all banks offer early direct deposit, as there is risk involved. A direct deposit could potentially be canceled before the bank receives it, leaving them to recuperate the funds from their client.
How Much Does Direct Deposit Cost?
Personally, I have never heard of a bank charging a customer for receiving a direct deposit. In fact, many banks reward customers who use it by offering better checking account features.
Check out this best checking accounts article to learn more about the benefits of using direct deposit.
What Time Does Direct Deposit Hit?
Direct deposit timing depends on when your employer sends the payroll information to ACH and when the bank chooses to credit the deposit.
However, there is a law stating that banks must deposit your direct deposit funds no later than the next business day occurring after the banking day that the funds are received.
When your bank does credit the money, it will generally show in your account by the time the bank opens in the morning.
You’ll find that some direct deposits show up as early as midnight on the business day they are supposed to be credited.
What are the Benefits of Direct Deposit
There are several benefits of having your paycheck or other income arrive via direct deposit.
First, there’s the convenience factor. Direct deposit saves you from having to wait for a physical check, find time to go to the bank, wait in line, etc.
Second, with direct deposit, your money is more secure. You don’t need to worry about your check getting lost, stolen, or going through the wash because you forgot to take it out of your pocket.
Which Banks Offer Early Direct Deposit?
There are a few banks that offer direct deposit. We’ll next share information about some of the most popular banks that offer direct deposit and their other features.
The following banks and banking apps allow you to get your paycheck up to two days early when you sign up for direct deposit.
Axos Bank
Axos Bank offers a checking account called Essential checking that provides the added benefit of getting your direct deposit paycheck up to two days early.
This is a benefit Axos calls Direct Deposit Express. Here are some other features of Axos Bank’s Essential Checking account.
- No minimum balance
- No monthly service fees
- Free debit card
- Peer-to-peer payments
- Bill pay
- $50 minimum account opening requirement
Other features include peer-to-peer payments, biometric identification, and debit card management from the app. You’ll also get unlimited ATM fee reimbursements with this account.
Chime
Chime is a banking app that provides banking capabilities with no fees. There are no minimum balance requirements and no account opening minimums either.
Note that Chime is a fintech app and not an actual bank account. However, Chime is backed by Bancorp Bank, so your money is FDIC-insured.
Along with offering early direct deposit, Chime offers fee-free overdraft protection for qualifying customers and fee-free in-network ATM usage.
Check out Chime’s Credit Builder account if you’re interested in building or repairing your credit. Chime has a high-yield savings account option as well.
Current
Current is a banking fintech that offers early direct deposit. Along with offering early direct deposit, Current also provides fee-free overdraft protection for customers who have direct deposit into their Current spend accounts.
There are no minimums and no service fees for Current’s spending account. In addition, you get points when you use your Current debit card, and the points can be converted to cash.
Current’s spending account also includes fee-free in-network ATMs and mobile check deposits. Other features of Current include a high-yield savings account and fee-free investing in cryptocurrencies.
Dave
Dave is a banking fintech that offers early direct deposit and free banking to customers.
You can get up to 15% cash back when you buy using your Dave debit card. And you can get ExtraCash cash advances when you qualify for the service.
Dave also offers a fun feature called Side Hustle. When you sign up with Dave’s Side Hustle, the app will hook you up with local, flexible jobs that fit your schedule.
Bonus feature: Dave has Goals pods that you can transfer money into or round up purchases and have the extra money go into one or more of your Goals accounts.
Fifth Third Bank
Fifth Third Bank is one of the oldest banks in U.S. history. The bank’s Momentum Banking checking account offers early direct deposit and a host of other features, including:
- No minimum balance requirement
- No monthly service fees
- Free tap/contactless debit card at in-network ATMs
- Extra Time feature, which helps you avoid overdraft fees
- No minimum opening balance requirement
The Extra Time feature gives you until the end of the business day following the business day your account becomes overdrawn to get money in to cover the negative balance.
If you get the money in your account within the specified period, you won’t be charged overdraft fees.
How Do I Sign Up for Direct Deposit?
Signing up for a direct deposit is easy. All you need to do is to contact your employer or another income source.
Explain to the representative in the payroll area that you want your checks credited via direct deposit.
There will be a form that you need to fill out. In addition, you’ll need to have your bank’s routing number and your personal bank account number for the account you want the check to go into.
You can find that information by contacting your bank, or you can find it on your personal checks for the account.
Final Thoughts
Knowing what time direct deposit hits is essential for helping you budget, along with general money management.
Your online banking can help you get a better idea of when your bank posts direct deposit checks,
And if you’re interested in getting your direct deposit up to two days earlier, consider opening an account at one of the banks mentioned above.