Direct deposit allows employers to send your paycheck directly to your checking or savings account. Most of the time, this process takes one to three days. You can cut that time in half with early direct deposit, which releases your money up to two days faster. It’s a smart way to access your paycheck funds without a waiting period. Here are five banks that offer early direct deposit.
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Financial Services that Offer Early Direct Deposit
Get your paycheck up to two days faster than your co-workers—that’s one of the many benefits of signing up for Chime. The online financial app has quadrupled its profits, thanks to its intuitive direct deposit system.
Many of Chime’s users are young and middle-class, as opposed to other financial institutions that target affluent customers.
When you sign up for a direct deposit account, you get access to Chime’s other services. For instance, you can overdraw your account up to $100 without a penalty. The substantial user base has made Chime one of the hottest up-and-coming online banks.Chime Disclosure - Chime is a financial technology company, not a bank. Banking services provided by, and debit card issued by, The Bancorp Bank or Stride Bank, N.A.; Members FDIC.
Wealthfront Cash Account
Wealthfront provides easy ways to upgrade your life with its Cash Account. The early deposit feature ensures that your paychecks arrive up to 48 hours ahead of a typical direct deposit. The rapid deposit allows you to earn more interest on your funds.
You can open your Wealthfront Cash Account with as little as $1. The account comes with a free planning tool and tailored advice based on your needs and goals. For instance, Wealthfront will automate investments on your behalf.
You may use any one of Wealthfront’s 19,000 free ATMs to access your paycheck. You can also send mobile payments, make purchases with Google Pay and Apple Pay, and deposit checks on your phone. Best of all, the Cash Account has zero fees.
Open an Axos Bank account and stop waiting for your paycheck. The digital bank, formerly known as Bank of Internet USA, has a safe and convenient early direct deposit system. It lets you access your money without delays.
Axos Bank touts its high levels of security and encryption, and its direct deposits are no exception. The online bank ensures that you receive your paycheck on payday. The immediacy reduces the chances of fraud and reasons to worry. Axos Bank’s easy-to-use system helps you get a jumpstart paying your bills while making smart choices with your money.
LendingClub Rewards Checking Account
You can receive your payment promptly when you sign up for early direct deposit at LendingClub Bank. The checking account also comes with above-average interest rates and free ATMs worldwide. You can even earn unlimited cash back with your LendingClub debit card.
LendingClub Bank, formerly known as First Trade Union Bank, is a hybrid bank. It has an online and community focus with only one physical location.
LendingClub Bank opened in 1987 but took off in 2013 thanks to a fintech partnership with LevelUp. Two years later, it partnered with Aspiration to launch its high-yield checking accounts. The strategic unions made LendingClub Bank one of the first institutions to offer early direct deposit, mobile payments, and a rewards app.
Current Premium Personal Checking
Current offers two account types: Basic and Premium. The Basic model includes a checking account, no overdraft fees, and no minimum balance requirements. If you want to access faster direct deposits, however, sign up for the Premium account.
Current is one of the most popular banks that offer early direct deposit. You can access funds shortly after your employer approves the transaction. That way, you can spend or save it without delay.
The Premium account also comes with a Premium card that immediately credits you for gas purchases. If you care about rewards points and drive a lot, the instant credit is a gamechanger. You can open a Current Premium account online or with the smartphone app.
Read our full Current Review
How We Came Up with the List
A lot of financial institutions offer early direct deposit but didn’t make our list. Such organizations include Andigo Credit Union, Varo, and Insight, ranging from traditional brick and mortar banks to digital ones. Our goal is to provide you with the best banks that offer early direct deposit.
The banks we selected center around innovation, convenience, and customer service. These banks are willing to challenge the status quo when it means providing better banking services to customers. It’s not a coincidence that many of our selections are digital banks.
Digital banks serve as the new frontier for banking. The low-overhead costs of running an online organization means that customers get a banking experience that gels with modern technology. Customers don’t have to wait in line for a teller or go to an ATM to make a deposit.
Many digital banks offer more competitive rates than their brick-and-mortar counterparts. These institutions don’t have to pay for physical branch locations. As a byproduct, customers get higher APY and lower fees. Another byproduct of digital banking has been the increase in the number of banks offering early direct deposits.
You are more likely to find a digital bank with early direct deposit than a brick-and-mortar one. There are still a surprising number of global banks that do not offer the service. They include, but are not limited to, PNC, Chase Bank, Citibank, Bank of America, and Wells Fargo.
Related: Best Online Banks
What Is Direct Deposit?
Direct deposit involves an employer sending pay funds electronically into a checking or savings account. The process offers a faster alternative to physical money or checks. It uses a network called an automated clearing house (ACH) to move your paycheck from your employer’s bank account to your own.
Direct deposit does not require a clearance period, so there’s no waiting for your balance to clear. Your bank will provide you with an electronic receipt to show the deposit. While paychecks make up most direct deposits, they can also include disability payments, Social Security benefits, and tax refunds.
If you want to receive a direct deposit, give your bank name, account number, and routing number to the person making the deposit. If you work for a large company, you’ll want to talk to someone in accounting or human resources. It takes a few days to set up the recurring payment.
All funds are electronic. Your employer will send them at midnight on the due date. Because direct deposit is automated, you will not have to wait to use the money.
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How Banks Process Your Paycheck Early
If you want to understand how early deposit works, you need to know how regular deposits work. While the process appears simple from the outside, it involves a series of intricate interactions between financial institutions. Here are the five core steps:
- Set Up Direct Deposit – The chain of events starts with you. You let your employer know that you want direct deposit and provide them with information about your bank account. Many companies have direct deposit forms that they give new employees at orientation.
- Send Payment Notice – Your employer will send a payroll notice to its bank before payday. Some people refer to the employer’s bank as the Originating Depository Financial Institution (ODFI). The notice includes your information, such as your routing number and payment amount.
- Forward Payment Information – When your employer’s bank receives the files, they forward them to an ACH. ACHs enable bank-to-bank transfer between various financial institutions. ACHs do not make transfers individually; instead, they process enormous batches of requests at once.
- Forward Payment Information (Again) – ACHs organize the payment instructions. You don’t want your payment going to someone else’s bank account, right? ACHs also process this second set of instructions in large batches.
- Process Your Payment – Your bank now has the payment information and can process the payment. Getting to this step requires consistent communication between the banks and the ACH. The entire process takes one to three business days.
Early direct deposit follows the same steps. The difference is a tweak in the fifth step. Instead of processing your payment and depositing the check, it reverses the steps.
Your bank makes a gesture of good faith that the paycheck will be valid. To reward its customers, the bank deposits the money before it finishes processing the payment. This action lets you access money faster than usual.
Pros of Direct Deposit
ConsumerCredit.com performed a survey in 2018 and found that speed was the number one reason people used direct deposit. Results showed that 53% of users prefer direct deposit for its immediacy, while 47% of people enjoy it because it’s free. Some of the other reasons that users use direct deposit include:
- No risk of losing physical check
- No holds
Direct deposit also saves you time. Once you link your bank account, you never have to drive to the bank and wait in line to deposit a check again. The automated process lets you spend more time on the important things in life.
Cons of Direct Deposit
The speedy and straightforward process does have some drawbacks. For instance, 6.5% of American households do not have a primary bank account, which translates to 14.1 million individuals.
Hispanics and African Americans have disproportionately high levels of being “unbanked,” with each group hitting double digital rates. The common reasons that people do not have bank accounts is a lack of money. Others do not trust banks or do not have access to reliable financial institutions.
Some other drawbacks of direct deposits include:
- Backdoor attacks from hackers
- Denial-of-service attacks
- Direct-access attacks
- The fact that changing banks is a hassle
Direct deposit may leave you vulnerable to online attacks. Hackers can exploit databases that don’t have authentication and bugs to access sensitive information. Make sure to use strong passwords and a password protector to mitigate your risk.
It’s worth noting that these risks are infinitesimally small. You have better odds of getting struck by lightning or winning than lottery than losing your direct deposit to hackers. The Social Security Administration proudly notes that it has successfully delivered every benefits check since accepting direct deposit in 1976.
Related: Is Online Banking Safe?
Signing up for early direct deposit is a no-brainer. It’s a safe, convenient, and expedient way to get your paycheck with almost no downside. The real question is: Which one of the banks that offer early direct deposit will you choose?
You can’t go wrong with any of the options on our list. Each financial institution has unique products and services, though they favor young, technologically inclined users. All that matters is that your bank meets your banking needs when it matters most.
Resource: Best New Bank Promotions & Offers