If you’ve been working for a while, you’re probably already familiar with direct deposit—the automatic process most employers use to send your paycheck straight to your bank account. Banks may even offer you some kind of perk for having your salary deposited directly with them. Read on to learn more about direct deposit accounts, how they work, and how you can set one up.
Receiving your salary by direct deposit
Receiving your salary by direct deposit is a super simple process—just forward your account number to your company’s HR manager or enter the required information via your company’s intranet. You’ll normally start receiving your paycheck in your direct deposit account the following month.
If you’ve already set up your direct deposit but are looking to switch banks, most banks offer a bank switch service that will make all the necessary changes for you automatically. With this service, all your normal standing orders will remain in place—only your bank will change.
The main pros of receiving your salary by direct deposit
It’s commission free
Nowadays, most bank accounts charge their customers fees like maintenance fees, withdrawal fees, and transfer fees. But usually, direct deposit accounts don’t come with any fees attached.
There’s no minimum term
Banks sometimes put a minimum term on new accounts. But there’s usually no minimum term for direct deposit accounts—you can close them whenever you like.
They come with a free bank card
Most direct deposit accounts come with a free debit card and sometimes even a free credit card.
They pay interest
There are also interest-paying direct deposit accounts. These accounts pay you interest in exchange for storing your money with them. If you’re able to save your salary, these additional interest payments will help you to grow your balance over time.
Better terms with other banking services
Customers who receive their salary through a bank sometimes get discounts or better terms on other services. One example is lower interest rates on bank loans and mortgages.
You can receive gifts
Do you remember the dinner set that your bank gave to your parents as a gift? This is getting less and less common, but banks often used to offer a choice of gifts to people who deposited their salaries directly with them. Think flatware, televisions, travel games, and tablets. You could get your hands on almost anything! Nowadays, they’re more likely to give you money as a reward. But bear in mind that these gifts come with strings attached—they’re only available after the minimum term. In fact, the gifts we’ve just mentioned were used as a benefit-in-kind for tax purposes.
Moneyback and bills
Some banks reward their direct deposit account customers with money back on bills for utilities like water, electricity, and internet connection. Make sure to read the fine print—in most cases banks only cover up to a certain amount of the bill, not the full amount.
Some banks offer to pay your net salary in advance in case something unexpected comes up.
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