Yes, you can usually set up a direct deposit into a savings account, but it all depends on the bank that you use. Most banks will allow it. Some will even allow you to split your deposit into multiple accounts.
Ah, the savings account. Is there anything that is more iconic than starting off your own little account with money set aside for a rainy day? If you’re like most people who have a savings account, life gets in the way and it takes effort to set aside money every paycheck. Direct deposits are one strategy to help you meet your saving goals (although there are probably better options for you). Here is what you need to know.
In most cases, banks will be fine with direct deposits for savings accounts. Setting them up can be a little tricky depending on the bank and the employer, but it’s usually doable. We provide a step-by-step guide below but it’s smart to ask your banker whether they allow direct deposits before you choose a savings account.
How to add a direct deposit to a savings account
The process of adding direct deposit to your savings account will be the same for most banks, though some may vary on the specifics. Here’s what you need to do, step by step.
- Go to your bank’s website or request forms to set up a direct deposit. If you are getting paid via an employer, you can ask for direct deposit slips from them.
- Obtain both the routing number and account number for your savings account. Online users might be able to get this automatically. If you can’t find your bank account details, look at your checkbook. The numbers will be written at the bottom.
- Enter the information for your savings account in the necessary areas. You might also have to agree to certain terms, but that’s normal paperwork.
- Choose the amount of your direct deposit. In some banks, this automatically defaults to the whole paycheck. However, you can also choose set amounts if you want.
- If your bank allows paycheck “splits” in direct deposit, set up the direct deposit for your checking account too. In the case of “split” deposits, you may have to mention how much money you want in each account.
- To make sure that everything is good to go, check with customer service before your first deposit. This is not always necessary, but it can avoid some nasty surprises.
Is it a smart idea to get a direct deposit to your savings account?
Just because you can do something doesn’t mean you should. It often depends on whether you are forced to choose between putting all your check into the account or if you can put a fraction. Putting your entire paycheck into savings is rarely a good idea.
Many savings accounts have a maximum number of transactions that you’re allowed to do per month. This means that daily spending from savings accounts isn’t always doable. Moreover, monthly maintenance fees can also make this a bad idea.
Here is SuperMoney’s list of the best savings accounts currently available.
It’s smarter to take a look at the current stipulations of your bank accounts to determine whether you should set up direct deposit into your main account, then automatically deduct a specified amount into your savings account next.
This free tool can help you compare savings accounts that provide mobile banking features.
FAQ about savings accounts and direct deposits
Should direct deposits cost anything?
It’s extremely unlikely that direct deposits would cost anything. It’s not in a bank’s interest to charge a fee for a service that gets people placing money in their accounts. If they charge fees, people might go to another bank or just choose to manually deposit checks. This actually causes more work to be done for bankers.
If you notice that your bank is charging a setup fee for direct deposits, it may be time to switch banks. That’s not normal!
Can you set up a direct deposit in a credit union savings account?
Credit unions work just like banks and generally offer the same perks as a bank account. However, they tend to be a little less “techy” with their setups. You can usually still get savings account direct deposit set up. Ask your banker what the official policies are.
Do you need a routing number to set up direct deposit?
Bank numbers all differ from state to state and company to company. It’s obvious that you need to have an account number to deposit your cash in an account, but the routing number is necessary too. It is theoretically possible to have two identical account numbers that exist in two different banks.
The routing number is the number that specifies the exact bank and region where your money belongs. As a result, no bank will allow you to set up a direct deposit routine without it.
When is it better to set up a direct deposit to a checking account?
Your checking account should be the number one bank account that you use. It’s going to be the one where you keep your money for daily purchases as well as the place where you will be able to best track expenditures. If any of the following are true, you should set up your deposits to hit your checking account instead:
- Your checking account has penalties if you go below the minimum balance. Those minimums are painful, and a single overdraft can be as much as $40. If you tend to keep a balance just above the minimum, you need to consider putting your deposit into checking, then doing an auto transfer of a stable amount.
- Your bank doesn’t allow you to do direct deposits into savings. If it’s a no-go, it’s not going to happen no matter how much you may speak to the bank manager.
- You are tempted to spend out of your savings account if all your money goes there. Reduce temptation, do things to minimize that risk. You don’t want your hard-earned savings to start vanishing the moment that you get paid. By moving most of it to your checking account, then transferring it to savings, you reduce that risk.
- You haven’t quite hammered down the way you want to start saving. Sometimes, it makes more sense to just manually set aside money for everything.
Is there any way to automate your savings deposits?
If the entire process seems like it’s a bit too much for you, you’re not alone. There has been a growing demand for a way to automate savings deposits. The good news is there are several apps that are famous for automatic direct deposits to a specific savings account.
Don’t want to open yet another savings account? I can’t blame you. One way that you can automate a savings deposit is to use your bank to do it. Most bank apps make it easy to do automatic withdrawals from your checking to your savings account. This doesn’t require fees, though you might get penalized if your checking dips below its minimum balance.
Are you a fan of Mint? Many budgeting apps are starting to offer in-app features that let you automatically stash away money every time you make a purchase. If you use apps for your money purposes, it may be time to take a look at what savings feature you can use to streamline savings.
Is it better to get a direct deposit to savings or pay down debt?
There seems to be a common misconception that people have surrounding paying down credit card debts versus having a savings account. A lot of people assume that you have to pay down debt on higher interest rate cards before you get a savings account. This just isn’t true!
While it’s true that you should pay down debt, you still need to set aside some kind of money for savings. That’s where setting up a savings account makes sense. Even if you’re only stashing away $30 a week, that money will add up in time.
Saving enough money to have an emergency fund to pay for three to six months of living expenses should be a priority even if you are trying to pay down debt. Those savings will help you avoid the need to apply for high interest rate loans to cover last-minute expenses.
- Most banks and credit unions will allow you to set up direct deposits into a savings account.
- You will need your saving account’s routing number and account number to set up direct deposits.
- Another option would be to automate deposits to your checking account, then send automatic money transfers to your savings account.
- Regardless of the method you choose, it’s important to make savings a priority.