No direct deposit? No problem!

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How many times do you see the offers from banks: “Free checking with direct deposit” or “$100 bonus when you open a new account with direct deposit”? So many bank offers and fee waivers are contingent on having direct deposit, and with good reason. Banks know that the more integrated your account is with the rest of your financial life, the more likely you will remain a customer and hopefully use other services from them. They are counting on that you are too lazy to go to the trouble of contacting your payroll department at work to have your direct deposit redirected to a new account. The same reasoning is why so many banks are now pushing bill payment services. You’re less likely to close an account if most of your bill payments are already set up through that account.

The problem with this is that there are lots of people such as the self-employed and employees of small businesses that don’t have direct deposit as an option. There are others of us that maintain multiple accounts (for instance, a local checking account for ATM access and small deposits and a high-yield checking through an online bank) and don’t necessarily want to send our direct deposit to a particular account.

Well, there is hope for those who are in this situation or that just want to take advantage of bonus offers requiring direct deposit. A direct deposit is simply an electronic transfer of funds to your account. This is usually done by a method known as ACH. The thing is that a ACH transfer to your account can be done in a number of ways besides through a company’s payroll department. Transfers from other bank accounts (either your own or someone else’s) and even from online payment services like Paypal are done by ACH as well. Unless a real person is looking at the detail of the ACH transfer, there is no real way to automatically tell if the ACH is a payroll deposit or not. Most of the time a bank will count these non-payroll transfers as a direct deposit, which allows you to avoid service fees and/or collect promotional bonuses based on the use of direct deposit.

The easiest way to simulate a direct deposit is by using another account you control that offers free outgoing transfers. Online savings accounts like ING Direct (click here for info on getting a referral for a $25 bonus), Emigrant Direct, or HSBC Direct all allow this. A few banks and credit unions offer this service free of charge as well. Some people have also successfully used PayPal transfers to simulate a direct deposit.

There is a lengthy thread on Fatwallet discussing this concept and compiling user experiences simulating direct deposits using various methods with different banks. I would caution that you SHOULD NOT CALL the bank and ask if whatever method will count, as they will almost always tell you no and it may tip them off to look for such activity on your account.


October 30, 2007 - Posted by | banking, Tips | , , ,


  1. Yeah I agree with you on that one. In some of the fine print on the direct deposits it states that you can have income from other sources such as interest disbursements count as direct deposits.

    So all you have to do is try it out and see what happens. If they question it or make an issue just point them to their own TOS which states what is a direct deposit.

    Comment by lulu | October 30, 2007

  2. Yet another reason I love working for my current employer: To change our direct deposit, we visit an internal web site and modify the information as needed. If the change is made 10 days prior to pay day, it takes effect on the next paycheck; within 10 days, the change is effective one check later.

    Oh, and maybe it’s just me, but I don’t use my bank’s online bill pay. If I go online and pay directly at the merchant’s site, I can print out (or, at least, print to PDF) the confirmation number given from their own site. If anything goes wrong with the payment, I have proof written by their own software.

    P.S. you’re welcome for the Coke codes! 🙂

    Comment by wes m | October 30, 2007

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