How to Split Your Direct Deposit Into Multiple Bank Accounts

Quick Answer

Depending on where you work, you may be able to allocate a percentage or flat amount from your paycheck’s direct deposit to your savings account, which could help you build savings faster.

A man wearing a navy blue suit smiles at his phone while he is outside.

Even if you plan to save each month, life can get in the way. Manually transferring money from checking into savings can be an easily forgotten task, but automation can make sure it happens.

Some employers let you automatically split up your paycheck's direct deposit into separate checking and savings accounts. This budgeting hack could help you save more money without even thinking about it. Let's go over how this process works and how it can get your savings plan on track.

How to Split Your Direct Deposit

Depending on your employer's payroll policy, you may have the option to have your paycheck direct deposits split between several checking and savings accounts on a percentage or dollar amount basis.

For example, suppose you want to save 10% of your income. You could tell your employer—potentially by indicating on a direct deposit form—that you want 10% of your paycheck to be deposited into a savings account and the remaining 90% to go to a checking account.

Another option could be choosing a specific dollar amount to deposit from your check into savings each month—such as $200, $400 or $700. Using this paycheck splitting strategy can put your savings plan on autopilot.

How Much Should You Devote to Savings?

A general rule of thumb is to save at least 10% of your income and have enough to cover at least three to six months of necessary expenses in case of emergency.

But rules of thumb are just general guidelines, and how much you can and should save comes down to your goals and what you can comfortably stash away while keeping up with your other bills.

If you're building up an emergency fund from scratch or saving for a house, for example, you may be able to reach your goals faster by putting away more than just 10%. But if funds are tight, you might need to save a small amount first and build up the amount you set aside over time.

Pros and Cons of Splitting Your Direct Deposit

If you're thinking about splitting up your direct deposit, here are some pros and cons to consider beforehand:

Pros

  • Direct deposit splitting is free and easy to set up if your employer offers it.
  • Splitting your direct deposit puts your savings plan on autopilot.
  • Your savings balance is guaranteed to grow as long as you keep the direct deposit allocation going and you don't withdraw from savings.

Cons

  • Direct deposit splitting options can vary from one employer to the next.
  • Splitting up your paycheck reduces the amount of money you get in your checking account, which could affect your monthly cash flow.

Other Ways to Automate Your Financial Plan

Taking the power of automation to other areas of your finances could help you work towards other goals as well. Here are some other ways to automate your financial plan:

  • Sign up for retirement contributions. Setting up automatic payroll contributions to your 401(k) or automatic transfers from your checking account to an IRA can help grow your retirement savings for your golden years. Both 401(k)s and IRAs come with two tax advantages: Annual contributions reduce your taxable income, and investment earnings aren't taxed until you withdraw money in retirement.
  • Set up bill autopay. When you're managing multiple monthly bills for housing, utilities, student loans and more, it can be easy for a payment to slip through the cracks, resulting in late fees or even a credit hit. Setting up automatic bill payments can help ensure your bills are always paid on time, and on-time payments on credit accounts can also help you build your credit score.
  • Use a savings app. Different savings apps offer additional tools that could help boost your savings automatically. Savings tools can automatically round up bank account purchases to the nearest dollar and deposit the difference into another account. Over time, the small change saved can add up.

The Bottom Line

If you're interested in splitting up your paycheck direct deposit, reach out to your company's human resources or payroll department. Update your employer with your savings account information and how much savings you want to allocate each pay period.

If splitting up your direct deposit isn't an option at your job, an alternative could be setting up an automatic transfer from checking to savings to occur each time you get paid. Remember that progress may not happen overnight, no matter the savings strategy you choose, but saving consistently can help you work toward your goals over time.

Maintaining your savings account so you can continue to make bill payments on time is a key component of protecting your credit score in case the unexpected happens.

The purpose of this question submission tool is to provide general education on credit reporting. The Ask Experian team cannot respond to each question individually. However, if your question is of interest to a wide audience of consumers, the Experian team may include it in a future post and may also share responses in its social media outreach. If you have a question, others likely have the same question, too. By sharing your questions and our answers, we can help others as well.

Personal credit report disputes cannot be submitted through Ask Experian. To dispute information in your personal credit report, simply follow the instructions provided with it. Your personal credit report includes appropriate contact information including a website address, toll-free telephone number and mailing address.

To submit a dispute online visit Experian's Dispute Center. If you have a current copy of your personal credit report, simply enter the report number where indicated, and follow the instructions provided. If you do not have a current personal report, Experian will provide a free copy when you submit the information requested. Additionally, you may obtain a free copy of your report once a week through December 31, 2022 at AnnualCreditReport.