Can You Direct Deposit Into a Savings Account?

Direct deposit is a convenient way to receive paychecks, tax refunds and other payments. But can you direct deposit into a savings account? Do you have to use a checking account instead? Banks often allow you to schedule direct deposit payments into a savings account, and there are some good reasons to consider doing so.

A financial advisor can help you create a budget that meets your short and long-term savings goals.

What Is a Direct Deposit?

Direct deposit is the process of depositing money into a bank account electronically instead of issuing a paper check. Direct deposit is used to send a number of payment types, including:

Paychecks
Federal and state tax refunds
Government benefits, including Social Security benefits and disability benefits
Annuity payments
Dividends and interest from investments
Employer-paid reimbursements for travel, meals and other expenses

The chief benefit of direct deposit is convenience. Direct deposits mean less wait time to receive payments and have them credited to your account. Some banks will even credit a regularly scheduled direct deposit a few days early. With a paper check you might have to wait a few business days after you deposit it for the money to clear.

Can You Direct Deposit Into a Savings Account?

Yes, you can set up a direct deposit into a savings account. A direct deposit into a savings account can be a smart way to grow your money with minimal effort. Having money deposited automatically removes the temptation to spend it before it can reach your savings account. And scheduling direct deposit for tax refunds or rebates can give your savings an instant boost.

Should Direct Deposit Go Into Checking or Savings?

A man reviewing how to set up direct deposit into a savings account.

Direct deposits can go to a checking account or a savings account. But it doesn’t have to be an either/or decision. Instead, you can pick and choose what to direct deposit into each account.

You could send the bulk of your paycheck to a checking account to cover monthly bills and spending while putting a smaller amount into savings. Deciding how much of your direct deposit to allocate to checking or savings can depend on your financial situation and goals. The money you keep in checking is money you plan to spend on bills and other expenses. And it’s important to keep a cushion in checking so you don’t run the risk of triggering overdraft fees.

Savings is for cash you want to keep. You might have one savings account for your emergency fund and separate savings accounts for short- and long-term financial goals. You can use direct deposit to fund each account instead of scheduling individual transfers from checking to savings.

How to Set Up Direct Deposit Into a Savings Account

If you’d like to set up a direct deposit into a savings account, there are a few pieces of information you’ll need:

Bank name
Bank routing number
Savings account number

The process for setting up direct deposit into savings can depend on where you’re doing it. If you’re arranging a direct deposit with your employer, for example, then you’d need to fill out a direct deposit form with the information listed above. Your human resources department or payroll department should be able to provide the form.

If you’re setting up direct deposit somewhere other than your employer, you may be able to do it online. The Social Security Administration (SSA) allows you to enroll in direct deposit to receive your benefits online. You can also enter your savings account information online with the IRS to receive direct deposit for tax refunds, stimulus checks, and advance tax credit benefits.

Pros and Cons of Direct Deposit Into a Savings Account

Setting up direct deposit into a savings account can be a helpful way to automate your financial habits. But while it offers some clear advantages, there are also a few drawbacks to keep in mind:

Pro: Automating deposits into savings helps you build your balance without needing to take extra steps. It removes the need to manually move money and can reduce the temptation to spend it.
Pro: Splitting your direct deposit between checking and savings accounts can support budgeting by keeping spending and saving funds separate, which may help you stick to financial goals.
Con: If too much of your paycheck goes into savings and not enough into checking, you may not have enough funds available for bills or daily expenses, which could trigger overdraft fees.
Con: Some savings accounts have limits on the number of withdrawals allowed per month. If you need to move money back into checking often, this could become inconvenient or lead to fees.

Is Direct Deposit Into Savings Safe?

Direct deposit is a safe, secure way to receive payments. As long as you’re dealing with a legitimate payer, then your money should be sent securely. You do have to provide the payer with your bank account number and routing number but that information is not shared with anyone other than the payer’s bank. There’s little room for error unless you provide the incorrect bank routing number or account number.

That can be a problem if your paycheck or tax refund ends up in someone else’s bank account. For that reason, it’s a good idea to double-check your bank details before submitting a direct deposit request to ensure that everything is correct.

Bottom Line

A man sets up a direct deposit into a savings account.

Can you direct deposit into a savings account? Yes, and doing so could be a straightforward way to grow your savings balance. Before setting up direct deposit to savings, you may want to take a look at your budget first. That can give you an idea of how much of your paychecks you can afford to add to your savings.

Tips for Banking

Consider talking to your financial advisor about the benefits of setting up a direct deposit into a savings account. Your advisor can help you with setting savings goals and creating a plan for reaching them. If you don’t have a financial advisor yet, finding one doesn’t have to be complicated. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
When setting up a direct deposit into a savings account, it’s important to choose the right place to keep your money. You could open a savings account at a brick-and-mortar bank, but you might get a better return by choosing a high-yield savings account at an online bank instead. High-yield savings accounts can offer competitive rates that outpace traditional banks, while also charging fewer fees. You can search for the best high-yield savings accounts online to compare rates at different banks.