When you deposit money into your bank account, it’s not always immediately available for withdrawal. The date that the funds become available for you to use is called the “earliest direct deposit date.” With most banks and credit unions, this date is usually within three days of when your employer sends the payment. However, some employers can set this up with banks with early direct deposits so that it is sent on a specific day each month—which can be a good way to budget or save up money for something fun.
1. Pay credit card bills
A lot of credit cards offer the option to pay your bill early and often. If you’re not automatically paying your bill, this is a great way to avoid late fees and build up your credit score. Plus, you’ll never miss another payment! Additionally, if you have a credit card with an annual fee, it’s often possible to get that fee waived if you set up automatic payments through online banking.
2. Plan a vacation
Earning early direct deposits is especially helpful when it comes to planning a vacation. The money can be used to book flights, hotels and other travel expenses before the rest of your paycheck arrives. Early direct deposits can also help you save for a car, pay off debt or save for retirement.
3. Avoid late fees on bills
One of the most common reasons people have trouble paying bills on time is that they forget to pay them. Setting up automatic payments can help you avoid late fees, but even then, sometimes, you will forget and miss a payment.
To avoid this problem, SoFi’s experts recommend, “Try setting up reminders to remind yourself when it’s time to pay bills.” An easy way to do this is through email or text message notifications from your bank or credit card company; many services offer these types of reminders for free.
4. Build your savings
There are a few things you can do with your early direct deposits. You can set up a savings account, open a low-interest savings account, make regular contributions to your savings account and use it for investments in stocks and bonds.
A great way to build your wealth is by opening a low-interest rate (or no-interest) bank account. You can open this type of account through any bank or credit union. When choosing an institution, be sure to consider the amount of money that will be earned on each dollar deposited and how often interest payments will occur.
5. Get a head start on your tax return
If you’re one of the people who gets a refund each year, then you might be tempted to put off filing your taxes until April, when you can get your money back in hand. But while it’s true that taxpayers who are owed refunds may not have to pay interest or penalties if they don’t file their returns within three years of receiving their refund—and that includes non-filers as well—filing early will give you control over how and when those funds are released.
You can take the money and invest it in a low-risk investment, like a savings account. You could also use it to pay off some debt or help out with household expenses. If you have other debts that are higher interest than average, it might be wise to focus on those first before investing any more money into your retirement account or other investments that may not give as much return on investment as expected.
