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Several banks have early direct deposit features, which could get your paycheck into your account up to two days early.
All banks are technically able process your paycheck early, but institutions make money by holding onto your paycheck longer to earn interest on the funds.
Early direct deposits give you quicker access to your money and may let you start earning interest sooner, depending on the account.
There are nine checking accounts with early direct deposit features right now, including accounts from Axos, OneUnited Bank, Wealthfront, and more.
See Business Insider’s picks for the best checking accounts »
Direct deposit is the fastest way to get your paycheck into your checking account. Several banks make this process even faster by implementing early direct deposit features.
Early direct deposit can effectively get your paycheck into your checking account up to two days early. Below, find nine accounts that offer this service, and an explanation of how they can do it and why it can be smart to take advantage.
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9 bank accounts with early direct deposits
1. Axos Bank Essential Checking
Axos Bank Essential Checking2. Chime Spending Account
Chime Spending Account3. Current Premium Personal Checking Account
Current Premium Personal Checking Account4. GoBank Checking Account
GoBank Checking Account5. GTE Financial Full Access Checking Account
GTE Financial Full Access Checking Account
This credit union has four checking accounts, including one for students. GTE Financial Full Access Checking is its most basic checking account, but all four offer early direct deposit.
6. One Account
One Account7. OneUnited Bank BankBlack Checking Account
OneUnited Bank BankBlack Checking Account8. Radius Bank Rewards Checking Account
Radius Bank Rewards Checking Account9. Varo Bank Account
Varo Bank Account10. Wealthfront Cash Account
Wealthfront Cash AccountHow banks process your paycheck early
How is possible for banks to get your paycheck into your account early?
“From a technical standpoint, any bank is capable of getting you your paycheck up to two days early … but they choose not to because they make money holding your paycheck hostage for a day or two,” Kate Wauck, Vice President of Communications for Wealthfront, told Business Insider.
“It’s referred to as ‘float’ which is basically banks double-counting deposits for a short period of time before they clear the transaction so they can earn interest on both of the amounts,” she continued. “A bank credits a customer’s account as soon as a check is deposited. Until the check clears the account it’s drawn on, the amount it’s written for ‘exists’ in two different places, appearing in the accounts of both the recipient’s and payer’s banks. So a bank will earn interest on the amount twice. So as you can see there isn’t huge incentive for banks to speed up the process because of float and their ability to double interest payments.”
Some banks choose not to hold onto your direct deposits, though, which can provide incentive for you to bank with the institution.
Benefits of early direct deposits
Early direct deposits have two main perks:
Faster access to …read more
Source:: Business Insider