How to Use Direct Deposit to Help You Save
Direct deposit allows you to have funds transferred into your account electronically versus another method, like cash or a paper check. The most common use for direct deposit is for income tax refunds or paychecks. Using direct deposit is a very convenient, quick and safe way to have funds directed into your accounts. Plus, there's normally no wait to access your funds. Unlike a paper check, direct deposits are usually immediately available for you to access whereas checks often have to go on hold until they clear the account on which they are drawn.
But did you know that you can use your direct deposit as a financial planning tool? Since you can direct your funds into accounts of your choosing, it's an excellent way to building up your savings and investments. Here are a few examples of how you can use direct deposit to help you save:
Divert part of your pay into a savings account
Most employers and benefits providers will allow you to deposit your net pay or benefits into multiple accounts. And here at First South Financial, we offer several types of accounts that can help you build your savings, like:
- Regular Savings Account - balances over $200 earn interest and there are no penalties for withdrawals
- Money Market Account - this interest-bearing account has a minimum balance requirement, but it does allow for unlimited deposits. There are limits to the number of monthly withdrawals as well.
- Christmas or Vacation Club Accounts - These accounts are designed to help you save for specific events like a summer vacation or holiday shopping. They feature a one-time interest payment and automatic transfer of funds to your First South Financial savings or checking account once their yearly cycle is concluded.
- Build-IT CDs - Unlike traditional certificates of deposits, our 3-month and 6-month Build-IT CDs allow you to make deposits at any time. Once they reach maturity, you can cash it out or roll it over into a traditional, longer term CD.
Make automatic contributions to your 401(k) or other investment accountsOnce you've got your emergency fund or short-term savings goals accomplished, you can also use direct deposit to contribute to your 401(k) or other investment accounts, like an
Individual Retirement Account (IRA). If paying for college is in your future, you may want to consider making contributions to a Coverdell Savings Account, or ESA. Be sure to check with your tax advisor to make sure you are choosing the account that works best for you and your financial situation.
Here at First South Financial, we stand ready to help you with your savings goals, whatever they may be. For more information, please
visit our website, firstsouth.com, drop by any of
our banking centers, or give us a call at
901-380-7400 today.
