Direct deposit lets workers save money because it allows them to avoid the cost of using a check cashing service.
Check cashing fees drain a paycheck. Even at stores with the best prices, it would be hard to pay less than six dollars per visit. Most independent check cashers charge three percent to cash a paycheck and more to take a personal check.
Workers who go to a check casher will pay a lot to do so over the course of a year. Take the example of a landscaper. In 2016, landscapers earned an average of $13.73 in the United States, according to the Bureau of Labor Statistics. A full-time landscaper would pay $857 over a year. That might be enough to cover a month’s worth of rent, all by itself.
Unfortunately, check cashing fees drain a lot of paychecks. According to the check cashing industry’s trade association, 35 million Americans use a check casher annually. Consumers spent $2 billion at check cashers in 2016.
By contrast, direct deposit is free. You won’t pay any fees to the check casher.
Many workers find that they can access their paycheck on payday. Ultimately, the arrival of a direct deposit depends upon how your employer manages payroll. If they send the payment request to their bank by Wednesday, then your direct deposit should be in your account on Friday morning. That means that you won’t have to spend an hour fighting traffic to get to a check casher on Friday evening. A direct deposit lands in your account without any effort on your part at all.