Is there anything better than the feeling of payday? It's that ever-so-glorious moment when you realize your hard work has paid off.
But what if I told you that you can feel the excitement of payday up to two days earlier? Yep, you can get paid a few days early with some banks via early direct deposit.
Erika Taught Me
- Early direct deposit is a feature some banks offer that lets you get paid up to two days earlier.
- To sign up, all you have to do is open an account with a bank that offers early direct deposit.
- You can take advantage of early direct deposit by automating your savings and use the extra days to tackle high-interest debt.
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How Does Early Direct Deposit Work?
When you are paid via direct deposit, you are paid via an ACH credit payment. Early direct deposit allows you to get this ACH payment up to two days earlier.
What is an ACH Payment?
An ACH (Automatic Clearing House) payment is an electronic transfer of funds between different bank accounts. They can be used for bill payments, account transfers, and in this case, direct deposits. They typically process within one to three business days.
ACH data files have different codes depending on what type of payment it is and the type of account it’s going into, like a personal or business account.
ACH files are also written with two different dates:
- The receiving date
- The effective date (also known as the “settlement date”)
The settlement date is the date the ACH is supposed to be made available to the recipient.
For example, your bank may receive a file on June 5th with instructions to “settle” or make it effective on June 7th. In a normal case, your bank would receive the ACH at some point on the 5th and hold it for release until the 7th.
But with early direct deposit, the bank would credit the funds to your account as soon as they receive the file. So, instead of waiting for the scheduled payment date to get your money, your bank releases it to you earlier since they know that the funds are on their way.
How Can I Sign Up for Early Direct Deposit?
Early direct deposit is a convenient (and free!) feature offered by many banks, credit unions, and financial institutions.
There are usually no strings attached for signing up for early direct deposit. You just need to open an account at a bank that offers it, and you’ll be automatically enrolled.
Remember to provide your employer (or government agency) with your new account information for direct deposit.
Keep in mind that not all banks offer early direct deposit. Some may also only offer early direct deposit for certain account types, so do a bit of research on the best checking accounts before signing up. Most of the time, early direct deposit is boldly advertised.
Another important thing to keep in mind is that to receive your direct deposit early, your employer (or the agency sending your payment) has to send the funds ahead of payday.
In most cases, employers will submit their payroll information to banks up to two days before the scheduled payment dates. But if you work for a smaller company, this may not be the case.
READ MORE: How To Successfully Switch Banks
What Banks Offer Early Direct Deposit?
Whether you are looking for an online bank or a brick-and-mortar bank with physical branches, here are some of our favorites that offer early direct deposit up to two days early.
Online banks that offer early direct deposit
- SoFi: Offers early direct deposit when you open a fee-free checking account, such as the SoFi Checking and Savings Account
- Varo: Offers a fee-free checking account and early direct deposit
- Capital One: One of the nation’s largest online banks that also offers early direct deposit
- Ally Bank: Offers a variety of checking and savings accounts and early direct deposit
Brick-and-mortar banks that offer early direct deposit
- Wells Fargo: A multinational company, and one of the nation’s largest banks, with both physical bank branches and online banking capabilities
- Regions Bank: A large bank available predominately in the Southeast and Midwest
- Citizens Bank: A large bank with access to both physical bank branches (predominantly in the Northeast and Midwest) and online banking capabilities
Fintech companies that offer early direct deposit
- Chime: Partners with other regional banks that offer early direct deposit, and the Chime Checking Account has no monthly fees
- Paypal: A multinational fintech that allows early direct deposit
- Venmo: Owned by Paypal and lets you receive your direct deposits early
How Can I Take Advantage of Early Direct Deposit?
Getting paid up to two days early can be a game-changer — especially if you find yourself in the pesky paycheck-to-paycheck cycle.
There are some ways you can take advantage of early direct deposit to better your financial state, too.
Automate your savings
It’s always a good idea to pay yourself first on payday. But with early direct deposit, you can do this up to two days earlier now!
Try automating your savings by setting a percentage (or fixed dollar amount) of your paycheck to go to your savings account automatically. Typically, you can select multiple accounts for your direct deposit with your employer.
Automating your savings removes the stress of having to remember to save money.
When it comes to your savings goals, you will first want to establish an emergency fund with three to six months of living expenses. Park it in a high-yield savings account like the SoFi Checking and Savings Account to earn the most interest you can — if you don’t already have one, now is the time to open one!
READ MORE: How Many Bank Accounts Should I Have?
Tackle high-interest debt
Making early payments on your debt can reduce how much you pay overall, since interest is accrued daily (but paid monthly) on many loans.
So, if you get paid two days early, you have the option to make your debt payments two days early, too.
Make it a priority to kill off any high-interest debt you have. High-interest debt is things like credit card debt, student loan debt, and other consumer debt like car loans. These debts are costly because of the high interest rates and possible fees.
Invest for your future
If you haven’t started investing, there is no better time than the present.
Getting paid early allows you to jumpstart your routine investments. And you don’t need a lot of money to start investing.
Like your savings, you can schedule and automate your investments to come out of your account at a certain time.
If you’re a beginner investor, start by investing in your retirement. You can sign up for your employer’s 401(k) plan (if offered) or you can open your own IRA.
FAQs
How can I get my money deposited early?
You have to open an account with a bank that offers early direct deposit. You will then give your employer your new account information.
Your employer has to send their payroll information to your bank one or two days before your scheduled payday. The bank will then release the funds to you early, once they receive word from your employer that the money is on its way.
Do you always get paid two days early with early direct deposit?
Most banks that participate in early direct deposit will release your funds as soon as they receive the ACH file instructions. In most cases, this is two days ahead of payday. However, some banks may wait an additional day and only release your funds one day in advance.
It also depends on when your employer sends the information to your bank.
TL;DR: Get an Early Paycheck with Early Direct Deposit
Early direct deposit is a convenient, free feature many banks now offer, letting you get paid up to two days early. It works by your bank releasing your money to you once they receive the ACH file from your employer instead of waiting for your official payday.
While it’s nice to get paid early, you can also take advantage of early direct deposit by automating your savings and investments and cutting a few days off of any high-interest debt.
For more tips on making your money work for you, check out these episodes of the Erika Taught Me podcast:
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Summer is a financial services professional and business school graduate turned personal finance writer. Through her careers in banking and corporate finance, she realized her true passion is to educate consumers about the complicated facets of all things money. Being immersed in the world of finance also inspired her to hit her own major financial milestones — and she's dedicated to sharing those tips with you! When Summer isn't writing, she is enjoying her time with her husband, daughter, and three cats.