Direct Deposit Your Way to Better Interest Rates


Besides saving you a trip to the bank, there could be some added benefits to having your paycheck deposited directly into your bank account.

Of course, there’s the obvious benefits of direct deposit, which enables you to see your paycheck clear the bank’s computer system; you get your cash faster than with a manual deposit and it also reduces the risk of your losing your paycheck.

But having your paycheck deposited electronically to your checking account could also lead you down a path to better interest rates as well.

So, how does that work? Call your bank and ask what interest rate benefits you might accrue if you opt for direct deposit.

Make no mistake, banks want you to use direct deposit as it gives them a highly sustainable pipeline to constant cash and saves them the paperwork and staff-power hours in handling your paycheck through traditional means.

In other words, they want you to deposit your check electronically and will likely want to make it worth your while to do so.

So during that call to your bank, the sales representative will most likely steer you to some form of a high-yield checking account or high-interest rate rewards program where direct deposit is both mandatory and, interest-rate wise, a good deal for consumers.

For example, take F&M Bank, a regional bank based in Clarksville, Tenn. The bank’s highest-yielding checking account is its “Smart E-Checking Account.” The account is billed by F&M as the preferred account for checking account customers who want to earn a great interest rate and prefer to do their banking electronically. The “Smart” online account is currently yielding a 5.0% yield on all deposits, up to $50,000. It also offers the use of any ATM anywhere at no charge; free express online banking and bill pay; free express phone banking; a free VISA ExpressCheck card; unlimited check writing; a monthly E-Statement and a $700 overdraft protection.

Now, compare the 5.0% yield to the national average on bank interest checking accounts, which, according to lies at 0.15%.

So what’s the catch? Consumers who opt for the F&M smart checking account need to enroll your payroll check into a direct deposit account and promise to use the VISA ExpressCheck card at least 10 times every month. Not too bad, right?

There are no shortages of both national and local banks that will provide a better deal on bank checking accounts, including a higher interest rate, but chances are those deals will be tied to some sort of online deal that’s linked to a direct deposit program.

Many, just like F&M Bank, will sweeten the pot by offering cash bonuses to sign up for direct deposit or even a cash bonus each time you electronically deposit your check. So that’s how bad they want your business, especially in direct deposit form.

For a good look at competitive checking account deals, visit

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