Inside: Are you looking for a way to help your kids learn about money? If so, Cash App for kids is the ideal answer. This guide will teach you how to manage money simply by using apps.
Ever wondered why it’s crucial for your kids and teens to have a cashless payment option?
In this digital age, teaching money management skills early to our younger generation is vital.
Having features likeCash App for kids is a great way to introduce them to responsible spending. Not only does it provide a secure method for purchases without the need for carrying physical money, but it also serves as an excellent tool for setting spending limits and tracking budgeting habits.
Plus, it’s a win-win for parents and teens as you can visually monitor transactions while they enjoy a sense of financial independence.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
What is Cash App?
Cash App is a user-friendly financial services platform that allows users to instantly send, receive, and invest money.
It offers a range of services including a free custom Visa debit card and the option to receive paychecks up to two days earlier.
Additionally, with the Cash App, users can instantly buy and sell stocks commission-free and even trade in bitcoin.
Can a child have Cash App?
Yes, a child can have a Cash App account if they are 13 years old or older. However, it requires parental approval.
Remember, this gives your child the opportunity to learn money management, but it also comes with the responsibility of overseeing their spending.
Why would kids need Cash App?
Well, we are moving to a cashless world. There are thousands of stores and restaurants that only offer cash. We learned this when our son went to an MLB baseball game with his middle school. No cash. Only debit or credit cards were accepted as well as Visa gift cards.
So, we needed to give our kids an introduction to modern, simple, and secure ways of money management.
Cash App might be the perfect solution. Another great option is Greenlight for kids.
Cash App – Do More with Your Money
Cash App is a user-friendly financial services platform that allows users to instantly send, receive, and invest money.
Simple way to save on everyday spending and back the way you want.
What are the benefits of using Cash App for kids?
Education: Cash App can be an effective way to teach your children about responsible money handling and the dynamics of a digital economy.
Control: You have the flexibility to set spending limits and disable certain features, ensuring responsible use of the application.
Security: Cash App’s encrypted connection adds an extra layer of security, keeping your kid’s transactions and personal data secure.
Emergencies and convenience: It’s an incredibly handy tool for sending cash to your kid during emergencies. No need to rush, just a tap on your phone, and you can send money.
What cash apps can 13 year olds use?
In today’s cashless society, it’s more important than ever for kids to learn how to manage money digitally.
Below are some alternatives to Cash App that serve well for 13-year-olds:
Description:
The Greenlight debit card is a kid-friendly financial tool designed for comprehensive money management education.
Parents can monitor and control card usage, set spending limits, and track your child’s spending and saving habits.
Learn to earn, save, and invest together. The banking and investing app for kids and teens.
Comes with a debit card
Allows kids to make savings goals.
Limited deposit methods
Monthly fee
Starts at $4.99/month
Description:
Prepaid cards and a family finance app for kids, teens, and parents.
More than money.
A financial education.
If you want your child to learn money habits that match your values, you’re in the right place.
Description:
Cash App is a user-friendly financial services platform that allows users to instantly send, receive, and invest money.
Simple way to save on everyday spending and back the way you want.
Description:
The Greenlight debit card is a kid-friendly financial tool designed for comprehensive money management education.
Parents can monitor and control card usage, set spending limits, and track your child’s spending and saving habits.
Learn to earn, save, and invest together. The banking and investing app for kids and teens.
Comes with a debit card
Allows kids to make savings goals.
Limited deposit methods
Monthly fee
Starts at $4.99/month
Description:
Prepaid cards and a family finance app for kids, teens, and parents.
More than money.
A financial education.
If you want your child to learn money habits that match your values, you’re in the right place.
No bank account needed.
No fancy phone needed.
Affordable for all! Plus free trial!
Mobile setup is not user friendly.
No investing option.
$5.99 month or $3.33/month for 12 months
Description:
Cash App is a user-friendly financial services platform that allows users to instantly send, receive, and invest money.
Simple way to save on everyday spending and back the way you want.
Only able to spend what is loaded on Card.
Free CashApp debit card.
No maintenance or annual fees.
Not FDIC insured.
No parental controls.
Remember, each app has its own unique strengths and weaknesses. Do some research and try out a few to see which one best suits your teen’s financial needs.
How do I create a Cash App account for my child?
Teaching kids about money management is vital for their financial future.
One excellent way to do this effectively is by setting up a Cash App account for children, giving them practical experience in handling finances while under a parent’s supervision. Also, known as a sponsored account.
This guide will walk you through the process of creating a Cash App account for your child and highlight the numerous benefits it offers.
Step 1: Download Cash App
To download Cash App, click this Cash App link to make sure you are in the right spot. Both you and your teen will need to do this step.
It’s easily recognizable – look for the white dollar sign on a green background. Once you’ve found it, simply hit ‘Install’ and sit back while your phone does the work.
Remember, this green goodness is only accessible to users in the United States.
When learning which payment type is best when trying to stick to a budget, you will be pleasantly surprised at how well Cash App works.
Step 2: Create an Account
This is a simple process. Both the teen and the adult will need to do this step separately. If as the parent you don’t have a Cash App account, then you will need to do this step.
To create a Cash App account, follow these steps:
Once installed, open the application and follow the on-screen instructions to set up your account.
You will have to enter your phone number or email address.
For security certification, the Cash App will send you a secret code to verify you. Enter it.
Select a $cashtag, which is a unique username to send and receive money (similar to Venmo)
Step 3: Connect a Bank Account
For the parent account, you need to complete this step and the teen will need to wait.
Remember, in “My Cash” you’ll spot the “Add Money” option for funding.
Open Cash App; it’s the icon with a white dollar sign on a green background.
Tap the top-right profile icon.
Navigate to “My Cash” – it’s a tab on the home screen.
Click “Link a Bank,” nestled within the options.
Follow the prompts to add your bank account or debit card info.
Once your card is linked, you’re all set.
Learn where can I load my Cash App card.
Step 4: Authorization Request of a Family or Sponsor Account
Now, you must link the two accounts together. Cash App calls this a sponsored account. There are one of two ways to accomplish this.
Option #1 – Parents Initiate the Request
To invite someone 13-17, then open the app:
Tap the Profile Icon on your Cash App home screen
Select Family
Tap Invite a teen
Follow prompts to share links using text or email
Option #2 – By the Teen
On the Home Screen, tap the Cash App profile icon.
Proceed to Family Accounts and choose the option “I’m a Teen”.
Complete the Cash App for Kids application form with your details including your name and birthday.
Hit the Request Approval button.
Enter the name, email, phone number, or $CashTag of your parent/guardian.
Lastly, tap Send. This will send an authorization request to your parent or guardian’s Cash App account. They need to approve this request before you can start using the app.
Note: You can’t add funds, send payment, or request a Cash Card until this authorization is approved.
Step 5: Have Your Child Design and Order a Free Cash Card
Now, the fun part! Ordering your own Cash App Card.
Designing and ordering your Cash Card is packed with creativity and ease.
Customize your card to represent your unique personality, with choices ranging from the material, font size, and base design, to text lines.
You can seek inspiration from an array of cool Cash App Card design ideas. Notably, the glow-in-the-dark cards are quite popular among minors.
The whole process is about making your debit card unmistakably yours.
Step 6: Limitations on Certain Features
Certain financial apps cater to teens by setting limits on transactions.
For example, a teen on Cash App can send and receive up to $1,000 every 30 days. This safeguard is designed to prevent overspending and encourage smart budgeting practices.
Furthermore, parents and guardians have the option to impose their own customized spending limits through the app according to their teen’s financial maturity. However, it’s essential to keep in mind, that these apps are not recommended to be used by teens just like regular accounts due to the risks of misspending and overspending.
Be aware that certain transactions are blocked, including bars, dating services, and rental car services
Encourage your kids to use robust, unique passwords and activate features like PIN lock and facial ID to enhance security.
You can ensure safety by setting a PIN, turning on notifications, and limiting money requests to ‘contacts only’.
This is similar to understanding the advantages of mobile phones for kids.
Step 7: Pick a unique $Cashtag
Tell your child to select a unique and fun $Cashtag for their Cash App account. It’s like a username and can be used in transactions.
Emphasize the originality of the $Cashtag as it needs to be unique.
Expert Tip: To secure their $Cashtag, avoid using personal information like birthdate or social security number. Instead, opt for quirky, fun, and uncommon word combinations.
Step 8: Send & receive money
Cash App provides an easy-to-use platform for instantly transferring money between friends and family at no cost.
A few quick taps allow users to request, receive, or send money, presenting a convenient method for paying a dinner, settling rent with roommates, or any other financial interactions.
In addition, users get a free custom Visa debit card, which they can order directly from the Cash App for both virtual and physical use. The card enables users to make purchases from any merchant accepting Visa cards.
Plus, with the Cash Boost feature, users gain from immediate discounts at select restaurants, stores, applications, and websites when they use their Cash App card.
An Alternative – Use Greenlight Debit Card for Kids
Looking for an all-in-one alternative to the Cash App for your kids?
Explore the Greenlight Debit Card for kids – a superb choice for money management and financial education.
The Greenlight debit card is a kid-friendly financial tool designed for comprehensive money management education.
Parents can monitor and control card usage, set spending limits, and track their child’s spending and saving habits.
Plus it offers 1% cash back on all purchases and up to 2% interest on savings, this card is accepted anywhere MasterCard is used and comes with built-in features that include educational programming and real-time notifications for every transaction.
Greenlight
The Greenlight debit card is a kid-friendly financial tool designed for comprehensive money management education.
Parents can monitor and control card usage, set spending limits, and track your child’s spending and saving habits.
Pros:
Offers a comprehensive financial education pathway
Broad acceptance due to affiliation with Mastercard
Parents retain control over spending limits
Real-time notifications improve security
Cashback rewards are an added bonus
Cons:
Greenlight charges a monthly fee starting from $4.99
Limitations on direct deposits
No possibility for payments from Paypal, Venmo or Apple Cash
Kids under 13 require parental access
Some transaction types are blocked
It’s an innovative and secure financial platform for kids, with plans starting at $4.99 a month.
Safety Measures for Using Cash App for Kids
Educating children about safety measures while using cash apps and debit cards is crucial in today’s digital age.
With increased online scams, it’s important that kids understand the equivalence of digital cash to real money and how to protect their accounts.
This brief overview will highlight key practices to ensure your child’s safety when handling digital transactions.
1. Know the App’s Safety Features
Knowing the app’s safety features is crucial for maintaining security while using cash apps.
These features can include password protection, two-step verification, and biometric scans such as fingerprint or facial ID. Many apps also offer robust encryption to secure data and transactions.
Keeping abreast of the app’s safety protocols not only helps safeguard against potential scams but also instills a better understanding of digital literacy. Understanding these safety measures and functionalities can greatly lessen the likelihood of falling victim to fraudulent activities.
Make sure they don’t learn how to unlock borrow on CashApp!
2. Talk to Your Kids About Money
It is essential to talk to your children about financial literacy from an early age especially if your parents never spoke about money.
Start by making them aware of the concept of saving by using tools like a piggy bank and elucidate the value of delayed gratification.
As they mature, introduce them to the functionalities of debit cards and apps like Cash App that provide hands-on experience in managing finances. Teach them about budgeting, saving, and investing in an age-appropriate manner.
Above all, impart the message that money doesn’t just grow on trees and that every purchase needs to be evaluated against future needs and plans.
3. Use Account Alerts to Stay Up to Date
Account alerts on Cash App are not only handy but critical to your kid’s financial safety. Setting them up is a breeze.
Firstly, head to the “Notification” tab in your app settings.
Thereafter, opt for “Account alerts” and switch it on. This will ensure you’re notified of all transactions.
For an added layer of security, enable “Suspicious activity” alerts; this helps to flag any odd movements swiftly.
4. Set Up a Strong Account Passwords
It is crucial to ensure that your online accounts are secured with robust and unique passwords.
Complex passwords that incorporate a mix of uppercase and lowercase letters, numbers, and special characters can provide a strong line of defense against unauthorized access. Also, you should look at changing these passwords regularly, which further enhances security.
Using a password manager, either online or paper-based, can assist in maintaining and keeping track of different account credentials, maximizing security while minimizing the risk of forgetting passwords.
However, if opting for a paper-based version, it is crucial to store it in a secure and confidential location to prevent unauthorized access.
5. Have a Conversation About Scams and Fraud
The proliferation of digital transactions and cash transfer apps has given rise to numerous scams, making it critical for users to look out for fraud.
Online scams can result in financial loss, with cash apps often not assisting in the recovery of misdirected funds due to errors or fraudulent activities.
Additionally, cybercriminals use these scams to steal personal data, leading to issues like identity theft and fraudulent transactions. Furthermore, the anonymity of digital platforms enables scammers to disappear without a trace after executing a scam, sometimes befriending and exploiting minors.
Therefore, everyone must stay vigilant about potential scams to protect their money, personal information, and overall digital safety.
Key Tips to Watch for:
Discuss current scams happening. Use reliable resources to educate them about how fraud works and precautions to take.
Teach them to *slow down* during transactions to avoid sending money to the wrong contacts.
Advise against sending money to strangers to avoid being scammed.
6. Check Bank Accounts for Any Unauthorized Payments
As a parent, it is essential to regularly check your teen’s checking accounts linked to their mobile wallet for unauthorized payments.
By staying vigilant, you can detect suspicious activity early and prevent possible instances of fraud.
Tracking their spending patterns also helps you understand if they are managing their digital money wisely or if there are sudden changes in their spending habits.
Remember, it is better to be proactive in monitoring these accounts, as most money transfer app funds are not FDIC insured, making the recovery of accidental transfers or payments a challenging task.
7. Ability to Give Your Kids an Allowance
If you choose to do so, giving your kids an allowance on Cash App is a safe and effective way to teach them about responsible money management. It provides hands-on experience while putting the power of monitoring in your hands.
To set this up, simply create an account for your minor and periodically send money to it as an allowance. They can spend or save it, while you observe their spending habits.
This is a simple way for kids and teens to start managing a small amount of money.
Cash App – Do More with Your Money
Cash App is a user-friendly financial services platform that allows users to instantly send, receive, and invest money.
Simple way to save on everyday spending and back the way you want.
Which cash app will you choose for your kids
To sum it up, equipping your kids with financial responsibility via Cash App or Greenlight is an intelligent move.
These apps provide a platform for learning about savings, investments, and the value of money.
Although risk exists its potential scams, with proper guidance, your teen can safely navigate this. The added perks of trading, direct cash exchanges, and options like BusyKid and Bankaroo can further enrich their financial literacy journey.
So, which digital wallet will you pick for your kid’s first leap into financial independence?
Know someone else that needs this, too? Then, please share!!
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Most checking accounts don’t pay interest, but a growing number of high-interest checking accounts do. Some offer yields on par with the best high-yield savings accounts, though often with extra hoops to jump through.
Nationwide Advantage Checkingcan’t match the best savings account yields, but it nevertheless provides a reasonable return on your cash when you meet two qualification requirements. If you regularly use your debit card and receive recurring direct deposits each month, you should qualify for the full yield.
That said, Nationwide Advantage Checking has some important downsides to consider before opening an account. Weigh the pros and cons carefully.
What Is Nationwide Advantage Checking?
Nationwide Advantage Checking is a high-yield online checking account that earns up to 0.90% APY in any statement period where you meet the two qualifying criteria:
Receive direct deposits totaling $1,000 or higher each month (good for 0.45% APY)
Make at least 10 in-person debit card transactions, each totaling $3 or more (good for another 0.45% APY)
If you complete one qualifying activity but not the other in a given statement cycle, you earn the posted interest rate for that activity but not the maximum possible yield.
Nationwide Advantage Checking is backed by Axos Bank, one of the biggest online banks in the United States. In addition to potentially paying interest on balances, it has customer-friendly features like no monthly maintenance fee and no ongoing minimum balance.
What Sets Nationwide Advantage Checking Apart?
Nationwide Advantage Checking stands out for several reasons:
Pays interest with qualifying activities. You can earn up to 0.45% APY when you receive qualifying direct deposits and complete at least 10 in-person debit card transactions of $3 or more each.
No maintenance fees. Unlike some high-yield and rewards checking accounts, Nationwide Advantage Checking charges no monthly or annual maintenance fees.
Big ATM network. Nationwide Advantage Checking has more than 80,000 machines in its ATM network, which spans the entire United States. You pay no fees to withdraw cash from these ATMs.
Above-and-beyond security features. On top of standard security features like automatic timeouts and SSL encryption, Nationwide Advantage Checking goes above and beyond with protections like two-factor authentication and complimentary antivirus and malware protection.
Key Features of Nationwide Advantage Checking
Don’t open a Nationwide Advantage Checking without understanding its core features and capabilities, from its fees and minimums to the conditions it places on interest payments.
Account Yield & Requirements
Nationwide Advantage Checking’s maximum yield is 0.90% APY. You must complete both of the following qualification requirements to earn it in any given statement cycle:
Make 10 or more debit card transactions in person, each totaling at least $3
Receive at least $1,000 in qualifying direct deposits, not including transfers between bank accounts
The debit card transaction requirement qualifies you to earn 0.45% APY on your account balance. The direct deposit requirement qualifies you to earn another 0.45% APY.
If you complete only one or the other in a given statement cycle, you earn only the corresponding interest rate. If you complete neither in a given statement cycle, you earn no interest for the period.
Account Fees & Minimums
This account has no monthly or annual maintenance fee and no ongoing minimum balance. There is a $50 minimum required opening deposit.
ATM Access
Nationwide Advantage Checking has more than 80,000 ATMs in its fee-free network. Cash withdrawals are free at all machines in the network, but you may face surcharges if you venture outside it.
Security Features
All bank accounts come with certain standard security features, such as encryption and password protection. Nationwide Advantage Checking goes a bit beyond the typical security lineup with two notable nonstandard features:
Complimentary malware and virus protection for customers
Two-factor authentication, which means your password alone isn’t enough for intruders to gain access to your account
Mobile Features
Nationwide Advantage Checking has a user-friendly mobile app with all the main features of the regular online account dashboard. You can deposit paper checks on your phone, set up recurring and one-time bill payments, and transfer funds to external accounts or other individuals with a few taps.
Deposit Insurance
Nationwide Advantage Checking comes with FDIC insurance on balances up to $250,000. Should Axos Bank (Nationwide’s banking partner) go under, your deposits are guaranteed by the federal government up to this amount.
Pros & Cons
Nationwide Advantage Checking has some clear advantages and a few notable downsides as well.
No maintenance fees or ongoing minimum balance
Better potential yield than most checking accounts
Large ATM network
Must complete qualifying activities to earn interest
Lower yield than the best high-yield checking accounts
No debit card rewards
Pros
Nationwide Advantage Checking is a low-cost, low-balance checking account that has the potential to be at least somewhat rewarding.
No maintenance fees. Nationwide Advantage Checking charges no monthly or annual maintenance fees, so you won’t pay anything out of pocket to keep your account open.
No ongoing minimum balance. Once your account is open, you’re not required to maintain a minimum balance. Some interest checking accounts make you keep hundreds or thousands of dollars in the bank at all times.
Better potential yield than most checking accounts. Nationwide Advantage Checking has a higher yield than most checking accounts. After all, traditional checking accounts pay no interest at all.
Large ATM network. Nationwide (through Axos Bank) has more than 80,000 fee-free ATMs, more than many competing banks.
Above-average security features. Nationwide Advantage Checking has a few nonstandard but welcome security features, such as antivirus protection and two-factor authentication.
Cons
Nationwide Advantage Checking attaches important conditions to interest payments and isn’t among the highest-interest checking accounts on the market in any case.
Must complete two qualifying activities each statement cycle to earn interest. You need to make at least 10 qualifying debit card transactions and receive at least $1,000 in qualifying direct deposits to earn the maximum interest rate in any given statement cycle. While not totally outrageous, these requirements aren’t easy for every user to fulfill.
Maximum yield can’t match the best high-interest checking accounts. It’s nice that Nationwide Advantage Checking yields anything at all. But it’s a far cry from the top high-yield checking accounts, whose yields compete with the top high-yield savings accounts.
No rewards on debit card spending. Nationwide Advantage Checking has no debit card rewards program. If you want to earn rewards on spending, consider a rewards checking account or app like Go2Bank.
How Nationwide Advantage Checking Stacks Up
Nationwide Advantage Checking shares the spotlight with several other interest-bearing checking accounts. Before you apply, see how it compares to another popular option: Quontic Bank High-Interest Checking.
Nationwide Advantage
Quontic High-Interest
Maintenance Fee
$0
$0
Minimum to Open
$50
$100
Minimum Ongoing
$0
$50
Maximum Yield
0.90% APY
1.10% APY
Qualifying Activities?
Yes
Yes
Both Nationwide Advantage Checking and Quontic High-Interest Checking have no maintenance fees and low minimums. Both also require qualifying activities to earn interest, though Quontic is a bit more manageable with just one requirement. Quontic’s maximum interest rate also noses ahead of Nationwide’s, if not by much.
Final Word
Nationwide Advantage Checking uses a two-tiered interest rate to encourage you to make it your main checking account. Neither qualifying activity is a heavy lift if you have a steady, decent-paying job and regularly use your debit card in person. While the maximum interest rate (currently 0.90% APY) can’t match the top interest-bearing checking accounts, it’s way better than nothing.
That’s not to say Nationwide Advantage Checking is the best checking account on the market. For example, you can earn interest at a much higher rate in a Wealthfront Cash Account — without jumping through any hoops — and you can earn rewards on debit card purchases with Go2Bank (among many other rewards checking accounts and apps). Nationwide deserves to be in the conversation, but don’t open an account before seeing what else is out there.
Editorial Note:
The editorial content on this page is not provided by any bank, credit card issuer, airline, or hotel chain, and has not been reviewed, approved, or otherwise endorsed by any of these entities. Opinions expressed here are the author’s alone, not those of the bank, credit card issuer, airline, or hotel chain, and have not been reviewed, approved, or otherwise endorsed by any of these entities.
The Verdict
Our rating
Nationwide Advantage Checking Review
Nationwide Advantage Checking has a higher yield than most checking accounts, but you have to meet two qualification requirements to earn it. It’s also not as rewarding as some checking accounts with more relaxed qualification requirements (or none at all). But it’s still worth investigating if you’re in the market for a new checking account and appreciate the opportunity to earn a return on your cash.
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Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he’s not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.
More than 93% of Americans receive their paychecks via direct deposit, meaning the funds are seamlessly transferred straight into their bank account. But did you know that some states allow employers to require that their workers use this payment method? Given that it can be time-consuming and costly for a business to issue paper checks, it can definitely be an advantage to companies.
Here, you will learn about which states require direct deposit and why, as well as learn more about this convenient payment method in general.
Direct Deposits are Electronic Payments
First, let’s quickly define what a direct deposit is. A direct deposit occurs when money is moved from one bank account to another without the use of a physical check. For example, an employer might shift money from its bank account to an employee’s bank account on payday.
Banks use the Automated Clearing House (ACH) network to coordinate electronic payments and other automated money transfers between financial institutions.
When you receive a direct deposit, money goes directly into your bank account, without the need for any intermediary steps, such as accepting the transfer, as you would if you were to deposit a check.
The money is cleared automatically through the ACH and is available immediately. With paper checks, banks might put a temporary hold on the funds while they wait for the check to clear. It can sometimes take some time for a check to clear; several days even.
Because it does away with a lot of cumbersome paperwork, direct deposit has become more and more popular. Direct deposit is not only used to transfer paychecks from employer to employees, but also for things like tax refunds and payments from retirement accounts.
Some government agencies have done away with direct deposit entirely. The Social Security Administration, for example, no longer cuts paper checks, and requires people to accept their benefits via direct deposit or a reloadable debit card.
Which States Allow Required Direct Deposit?
Depending on state law, employers may be allowed to require that employees accept paychecks through direct deposit. State law is not always cut and dried, however.
The rules may depend on whether an employee works in the public sector or for a private company. And rules may not apply to all employers equally.
Here’s a look at the states that allow some form of mandatory direct deposit.
State
Mandatory Direct Deposit Allowed?
Which Employers Does This Rule Apply To?
Alabama
Yes for private sector, no for public sector
All employers
Arizona
Yes
All employers
Indiana
Yes
All employers
Iowa
Yes, for employees hired after July 1, 2005. Employers may not require direct deposit if the cost to employees of setting up and maintaining a bank account effectively reduces their wages to below minimum wage.
All employers
Kentucky
Yes
All employers
Louisiana
Yes
Public sector, state government
Maine
Yes
All employers
Massachusetts
Yes
All employers
Michigan
Yes
All employers
Minnesota
No for private sector employees, but the commissioner of labor and industry may require direct deposit for public sector employees.
All employers subject to state statutes
North Carolina
Yes
All employers
North Dakota
Yes
All employers
South Dakota
Yes
All employers
Tennessee
Yes
Private employers with at least five employees
Texas
Yes
Private employers, except those involved in agriculture or horticulture, household domestic service, or other employment in which there is a written agreement that provides different terms.
Utah
Yes
Private employers except for those involved in farm, dairy, agricultural, viticulturally, or horticultural pursuits; stock or poultry raising; household domestic service; or other employment in which a written agreement provides different terms.
Washington
Yes
All employers
West Virginia
Yes for state higher education institutions. No for employers subject to the state Wage Payment and Collection Act.
Wisconsin
Yes
All employers
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Advantages of Direct Deposit
Whether or not direct deposit is required, there can be some distinct upsides for employers and employees.
Convenience
Direct deposit takes a lot of the legwork out of receiving a paycheck. The funds are deposited automatically and regularly, requiring no trips to the bank or mobile deposits. You don’t need to be home to receive the check. So if you’re on vacation or working far from your regular stomping grounds, your check will go through without lifting a finger.
You may also be able to send some of your paycheck to a savings account, which is a way to automate your savings.
Organization
Keeping track of paper checks can be a pain for employers and employees, who may end up having to file away hard copies of records, such as pay stubs, for future reference. Electronic transfers provide a paperless transaction history that both parties have access to. The transaction history doesn’t need to be stored in a physical place, so it can be referenced from anywhere at any time.
Resource Saving
Sending money via the ACH is often cheaper for employers than printing and mailing paper checks. Generally, it is free for employees to receive payment through the ACH. It’s also greener, allowing businesses to cut back on the amount of paper, ink, and energy that they consume.
Security
It is possible for paper checks to be lost or stolen, and even for someone to fraudulently cash them. Issuers may charge a fee to replace lost checks, and the process of stopping payment on stolen checks may be slow and expensive.
Generally speaking, direct deposit provides a safer alternative for transferring cash since there is no physical item to be lost or stolen.
There are some potential security issues when setting up direct deposit, as banking information must be exchanged between employees and employers. Making sure that the information is passed through secure channels to a person you can trust can help ensure that direct deposit is set up securely.
Speed
How long does a direct deposit take? The swiftness of direct deposit transactions is one of the key benefits. Money often hits your account nearly immediately after a transaction is made. And transactions usually occur at midnight the night before payday, meaning direct deposits may arrive in an employee’s account long before a paper check would arrive in the mail.
Disadvantages of Direct Deposit
Despite the benefits of direct deposit, there are some reasons that the process can be disadvantageous.
Costs and Fees
In some cases the cost of opening and maintaining a bank account can be burdensome for employees, reducing the amount of their take-home pay. Iowa protects against this possibility by disallowing mandatory direct deposit if it becomes a financial burden.
Lack of Attention
Because direct deposit is automatic, you may forget to check deposits in your bank account regularly. That means that if any problems occur, they may go on for a long time before you catch them.
You can avoid this issue by setting up alerts with your bank every time you receive a deposit to quickly see if everything is correct, and if not, nip any problems in the bud.
Cyber Threats
Though direct deposit provides a relatively secure way to transfer money, that doesn’t mean it’s immune to cyber criminals looking to steal sensitive financial information and bank fraud. Protections against cyber threats include using complicated passwords and password protection and avoiding phishing scams that might give fraudsters access to emails and data.
Setting Up Direct Deposit
To set up direct deposit, you must first have a checking or savings account. To receive electronic payments, you must provide your bank account information to your employer.
There may be a specific form that you are asked to fill out, you may be asked to provide a voided check, or you may simply be asked to provide your account information in an email.
Once again, always be sure you are sending your information to someone you trust and through a secure channel. You may want to avoid sending sensitive information, like account numbers, through email, instead handing information directly to a person or providing it over the phone.
Typically you’ll need to let your employer know whether your deposits will be going into a savings or checking account.
Your employer may ask you for other information, such as the name of the account holders on your checking or savings account, your mailing address, and your Social Security number.
Employees can list multiple accounts for direct deposit, which can help them accomplish their financial goals. For example, a worker could direct a portion of the paycheck to a checking account and another to a savings account. That way savings are automated while ensuring that enough is in checking to cover bills.
The Takeaway
Speaking of divvying up earnings to meet specific needs, SoFi Checking and Savings is a good candidate for that — plus much more. It’s a bank account online that offers Vaults for particular goals as well as Roundups to help grow your money. What’s more, you will earn a competitive annual percentage yield (APY) and pay no account fees.
SoFi Checking and Savings: The smart, simple way to manage your money.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
SoFi members with direct deposit can earn up to 4.20% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 1.20% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 4/25/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet. Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances. SOBK0523011U
Save more, spend smarter, and make your money go further
Last year this time– right around Halloween – my wallet was stolen from my son’s stroller. (Okay I shouldn’t have placed it in the stroller in the first place, but I never imagined anyone would steal it. It was only slightly visible, tucked inside a pouch.)
You can guess the rest.
In a store elevator, while a woman to my right started talking me up and gushing over my then 1 year old son’s shoes (they were really cute), her quiet accomplice (to my left) crept her fingers into my stroller pouch and nabbed the wallet.
An hour later, when I realized the wallet had disappeared, I rushed home to check my bank and credit card accounts. As expected, the thieves had spared no time. They’d racked up over $500 in charges at the very department store where they’d stolen my wallet. They also purchased a number of monthly subway passes on their way out of the crime scene.
Some serious professionals had defrauded me right in my own neighborhood!
Lesson learned: Keep your wallet out of sight and reach.
But, sadly, wallet theft is not the only way or even the most common way fraudsters can get a hold of our financial accounts. Much of it happens online via hacks or breaches. Fraud devices or “skimmers” at ATM machines and card readers can also be sources of fraud.
This Halloween here’s some advice on how to prevent your financial info from getting in the wrong hands and what to do in case you become a victim of fraud.
Double Down on Password Protection
A wise rule of thumb is to use various passwords for various accounts. Don’t just use one universal password for every website since it makes it all too easy for a fraudster to access your bank accounts, payment sites, etc. if he or she gets ahold of your secret alpha-numeric-symbolic code.
But few of us actually follow that rule of thumb. Nearly three out of four consumers use a duplicate password, many of which haven’t been changed in the last five years, according to a recent survey.
If you’re worried about remembering all your passwords, consider using password management tools that provide a secure and virtual “vault” for all your passwords. LastPass and TrueKey offer free basic memberships.
As for how often should you change your passwords? Do better than every five years, but don’t worry about changing them every month. A study by the University of North Carolina at Chapel Hill found it’s better to change passwords infrequently.
While some sites and offices require you to change your password every few months, this can actually backfire, the study found, because when we are forced to change our passwords so many times we don’t get very creative. We may add a “1” or make a slight variation from the last password. And this makes our passwords all the more predictable to hackers.
In fact, for 17% of the accounts in the study, knowing a user’s previous password let researchers to correctly guess their next password in fewer than 5 guesses.
It’s fine to change your password once or twice a year, as long as it is made of a random variation of text including different cases of letters, numbers and symbols. And stay away from the obvious like your birthdate or a sequence of letters and numbers (e.g. ABC123)
Stick With Credit
You may notice when you go to checkout with a card, you’re now asked to dip instead of swipe. The U.S. recently moved to EMV chip card technology, in an effort to combat counterfeit card fraud. In time paying with a credit card should get safer.
Meantime, if you’re ever wondering whether it’s safer to use a debit or credit card, stick with credit. In the event of fraud, it will be easier to dispute the claims.
According to the Fair Credit Billing Act your maximum liability for fraudulent credit card transactions is $50. But if you report your card lost or stolen prior to fraudulent transactions your liability could even be $0.
With debit card fraud, on the other hand, you’re sometimes at a loss until the claim is resolved. What’s more, if you don’t report your card lost or stolen within sixty days your liability limit is up to $500.
Scan Your Statements
Keep a watchful eye on your accounts. Even if you’re a fan of auto-pay, it’s worth reviewing your bills regularly for unfamiliar charges. Card issuers and banks are getting better at alerting us of suspicious charges, but it’s always helpful to play an active role ourselves, too.
If you suspect your account’s been compromised contact your bank or card company immediately and have them investigate. In the meantime, they may shut off the account and send you a new card with a new account number just to be on the safe side.
Another place to look for red flags is your credit report. You can receive a free credit report from each of the three major credit-reporting agencies – Equifax, Experian and TransUnion – once a year at annualcreditreport.com. If you don’t recognize some of the items on your credit report such as random credit inquiries or unfamiliar card accounts immediately reach out to the credit reporting agency or agencies that’s listing the false information and explain the situation. Here’s a list of their phone numbers:
Experian: 1-888-EXPERIAN or 1-888-397-3742
Equifax: 1-800-525-6285
TransUnion: 1-800-680-7289
You may want to place an extended fraud alert or credit freeze on your account. You can find more information on how to do this on the Federal Trade Commission’s website.
Avoid Random ATM Machines
Fraudsters and ID thieves may secretly install special equipment in credit card readers either at the ATM, gas pump machine or any other card swiping device to capture or “skim” our personal information on our credit or debt card each time we swipe. The reader makes two copies of your credit or debit card information: one to process the transaction and one to later download the information to the ID thieves.
To play it safe, use trusted ATM locations. Your bank branch’s ATM is usually a safe bet, since a security officer or camera often guards it. It’s a lot more difficult for ID thieves to compromise an indoor bank ATM than say, a random ATM on the street corner outside a convenient store.
Trim Down Your Wallet
While it’s not realistic to say, “Don’t carry your credit cards or cash in your wallet,” there are some other sensitive items a few of us DO carry in our wallets that aren’t necessary. The Identity Theft Resource Center recommends five things you should never carry in your wallet including your social security card or even a copy of your social security number, your birth certificate, bank account or routing numbers and password cheat sheets.
It’s best to keep these items tucked away in a safe and hidden place…and by no means in your child’s stroller!
Have a question for Farnoosh? You can submit your questions via Twitter @Farnoosh, Facebook or email at [email protected].
Farnoosh Torabi is America’s leading personal finance authority hooked on helping Americans live their richest, happiest lives. From her early days reporting for Money Magazine to now hosting a primetime series on CNBC and writing monthly for O, The Oprah Magazine, she’s become our favorite go-to money expert and friend.
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