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Can I direct deposit into a savings account?

Direct depositing a paycheck into a checking account is a popular option for many people to receive their paychecks, Social Security benefits, and IRS tax refunds. However, it is also possible to direct deposit into savings instead of checking, as long as the direct deposit instructions are set up using your savings account number.
 
It's important to note, some credit unions and banks may impose a limit on the number of savings account transactions that can be completed on a month-to-month basis. Check with your financial institution before you move forward with setting up direct deposit to your savings account, to ensure that the bank's policies meet your depositing needs.
 
At Credit Union of Southern California (CU SoCal), we make opening a savings account easy!
 
Call 866.287.6225 today to schedule a no-obligation consultation and learn about our mortgages, home equity lines of credit, auto loans, personal loans, checking and savings accounts, and other banking products. As a full-service financial institution, we look forward to helping you with all your banking needs.

What is direct deposit and how does it work?

Direct deposit is a way to receive payments owed to you by having the money directly deposited into your checking or savings account. Setting up direct deposit means you won’t receive a paper check for that payment, and the funds will be electronically deposited by the payer into the account(s) you specify. Direct deposit saves time because you won’t have to make a trip to your credit union or bank to deposit your paycheck. Money that goes into direct deposit is typically available to the account holders immediately, whereas paper checks take time to process and the money takes days to be available for withdrawal.

How to set up direct deposits into a savings account

The process for setting up direct deposits into a savings account is similar to the process for setting up direct deposits into a checking account: 

1. Gather necessary information. Your bank account number and the bank's routing number are two essential pieces of information needed for direct deposit.
2. Obtain direct deposit form. Credit unions and banks can provide a direct deposit form with your account number and bank routing number. For employer pay, consult a payroll staff member to see if there's a particular form the company uses for employee direct deposit.
3. Decide how much you want to deposit into savings. Most forms provide the option of selecting a percentage or dollar amount of your total payment. You'll also get to choose if you want to split the deposits, by having a portion direct deposited into your checking account.
4. Submit your direct deposit form. Keep a copy of your completed form for your records before you submit it to the employer or agency that will be paying you.

Is it a good idea to direct deposit into a savings account?
Yes, having a portion of your earnings or other payments owed to you direct deposit to your savings account will help you build a nest egg that can come in handy in case of emergency medical bills, job loss, emergency home repairs, or saving for a vacation or buying a new car.
 
What are the advantages of direct deposit?
There are numerous advantages of direct deposit, including:
 
Quicker access to funds. Once your credit union or bank receives the funds, the money is available in your account immediately, unlike with depositing a traditional check which requires time for the funds to clear.
 
Time saver. Save time and save money on gasoline by reducing trips to the bank to deposit your paychecks.
 
Security. Direct deposit is safer than receiving a paper check. Paper checks can get misplaced in your home, lost in the mail, or lost on your way to the bank.
 
Better record-keeping. Direct deposits are a form of electronic payments, which creates a traceable record of all your incoming payments. Direct deposits you receive will be indicated on your account statement as an "ACH" payment from the company or agency that paid you, which improves record-keeping.
 
Automatic bill payments. Most people set up direct deposit to go into their checking account. Knowing that your payments will be regularly and reliably deposited means you can set up automatic bill pay of utility bills, loan payments, credit card payments, and more.
 
Special benefits and perks. Many credit unions and banks offer high-yield checking accounts and rewards checking accounts that pay a higher dividend on account balances when you sign up to receive direct deposits or any electronic deposit into your account.

What are the disadvantages of direct deposit?

There are not really any disadvantages to direct deposit. Nor are there disadvantages of setting up direct deposit into savings instead of checking. Direct deposit is a safe, reliable, and faster way to have access to money paid to you, rather than being paid with a paper check that arrives by postal mail. From a convenience standpoint, direct deposit requires new paperwork if you change your accounts to different banks or want to change the amounts that are direct deposited into your savings or checking account. In either of these cases, you will need to complete and submit new forms to your employer of the agency paying you.

How much should I deposit into my savings account?

The amount you choose to have direct deposit into savings instead of checking may depend on several factors such as your savings goals and how much money you need in your checking account to cover your monthly expenses. Always be sure to fund your checking account first so your bills are covered in full, before setting money aside into a savings account. When it comes to how much money to keep in a savings account, most financial experts recommend having between three months and six months of living expenses in a savings account.

Is a savings or checking account safer for direct deposit?

Direct deposits into both types of accounts are equally safe. Many people consider safety one of the benefits of direct deposit because it eliminates the risk of a paper check being lost in the mail, misplaced in the home, or stolen.

Can direct deposit go to two different banks?

In most cases you can request that money paid to you be direct deposited into two different banks. This is particularly helpful if you have your checking account at one bank and your savings account at another.

Can you wire funds into a savings account?

Generally, yes, you can wire money into another person's savings account or your own.
Wire transfers of funds may come with a fee paid by the sender.

 
Why savvy consumers choose CU SoCal

For over 60 years CU SoCal has been providing financial services, including mortgages, Home Equity Loans, HELOCs, car loans, personal loans, credit cards, and other banking products, to those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County.
 
Please give us a call today at 866.287.6225 today to schedule a no-obligation loan consultation with a CU SoCal Member Services specialist.