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Banks give customers early access to their paychecks


Payday comes early for some bank customers.

Huntington Bancshares and Fifth Third Bank have introduced services that allow customers to access regular deposits up to two days in advance.

This means, for example, that a worker who is normally paid on Friday could potentially receive their money on the Wednesday before payday.

“At the end of the day, our customers say they needed this product,” said Steve Helmcamp, senior vice president and head of retail in central Ohio for Cincinnati-based Fifth Third.

Both banks require that workers’ paychecks be set up for direct deposit.

How quickly they can get the money depends on how quickly the bank can get the information about the deposit coming to the banks, the banks say.

Both banks are promoting the service as a way to save consumers money and provide more convenience. By accessing their paychecks earlier, they can avoid potential overdrafts or they have to go to expensive payday lenders.

The program includes social security, pensions, military income payments and other regular deposits. Eligible customers receive automated emails notifying them that they will be signed up for their next deposit.

“People overdraft a day or two before their paycheck comes in. They just skew the payments that come up,” said Bryan Carson, who heads product development for Huntington.

Until now, prepayment programs have been more common with online banks and even some credit unions, said Bruce Clapp, president of Market Match, a Dayton-based financial marketing firm.

“It’s something that should become mainstream because it solves a lot of problems,” he said.

Such products help create a bridge for consumers worried about not having enough money in their account to cover their immediate bills and could save them $ 50 or even $ 100 if they had to go to a lender otherwise. on payday for an injection of money, Clapp said.

From there, such programs could help consumers develop a stronger relationship with a bank to help them become more financially stable, he said.

It can also help banks deepen their relationships with customers who might use more of the bank’s services, he said.

Many consumers have severed their financial relationships, often dealing with seven to nine companies for a checking account, mortgage, car loan, student debt, retirement savings and credit cards, he said. Before, there were only two or three.

Clapp said there is minimal risk to banks for such programs. Many banks already offer overdraft protection or offer a line of credit to customers, he said.

“For the household living paycheck to paycheck, having quick access to that money can get you out of a bind,” said Greg McBride, chief financial analyst at Bankrate.com.

Prepayment is an extension of the more user-friendly programs that banks started a decade ago in which they began to link checking and savings accounts to help consumers avoid overdrafts. , emails or SMS alerts when balances drop to certain levels, and not charging for small overdrafts, McBride said.

He said such programs allow banks to compete more effectively with internet banks and fintech companies that offer such programs. In addition, overdraft fees are in the crosshairs of regulators and lawmakers, he said.

“Over time, this can prevent an even more drastic response from regulators,” he said.

The State Highway Patrol Federal Credit Union offers loans of up to $ 2,500 to its 7,000 members that can be used to cover expenses and avoid having to resort to more expensive alternatives.

Cadets often find the offer useful when they need to relocate and make apartment deposits, giving them peace of mind, said Becky Landis, CEO of the credit union.

The loan must be repaid within one year.

Huntington sees Early Pay as the next step in programs that started a decade ago that give consumers 24 hours to cover an overdraft before imposing fees and free checking accounts with no minimum balance.

In addition to early payment, Huntington has launched other new initiatives, including Standby Cash, which gives eligible customers immediate access up to $ 1,000 with no interest or fees if customers sign up for automatic payments.

Waiving the overdraft fee costs the bank money, Carson said.

“We take a longer term view of value,” he said. “We are doing this to keep customers longer and to attract people to Huntington when they are ready to change banks.”

Helmcamp of Fitfth Third said that getting paid early is part of the bank’s Momentum Banking effort, which offers a variety of services to help consumers. Customers who take advantage of the program get their own personal banker who can follow them to help them with their banking needs, he said.

“It’s really all a customer wants that is drawn to digital banking and complements that with what traditional banking offers,” he said.

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