How does CU early payroll Direct Deposit work?

[DaveInAZ]

I had my payroll direct deposit going into Wells Fargo and it was always credited on Friday, the pay day. I finally wised up and dumped WF and moved my payroll DD to Penfed credit union. I thought it was strange that at Penfed my payroll was always credited a day early Thursday morning. But I never complained.

I recently moved my payroll to Digital Credit Union where I got the best car loan rate & terms, and the same thing - DCU credits my payroll DD Thursday mornings. But DCU promotes this:

When I click on the details they say this:

When most companies direct deposit a pay check, they notify us up to 2 days in advance that it is coming. We make those funds available to you as soon as we know about them resulting in your early pay day!

What is this "early notification" about? Some kind of ACH Pre-credit notification? Maybe some kind of pe-notification to make sure the DD account & routing numbers are still correct before they try to deposit the money?

And if credit unions credit the funds when notified before the actual deposit, why don't banks do this? Just curious. And still not complaining.

[Anonymous]

From a totally different bank that offers it:

"When your employer processes payroll, they submit files to the Federal Reserve notifying them how much each employee will be paid that week. The Federal Reserve sends that information to us every day to let us know how much and when you’ll be paid. Instead of waiting until your payday to deposit the funds, we make that money available as soon as we receive the notification. For many Chime Members, we receive a notification on Wednesday for a Friday payday (which means Chime Members are getting paid two days earlier than everyone else at the office)."

https://www.chimebank.com/2017/08/22/this-is-how-chime-helps-you-get-paid-early/

[DaveInAZ]

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@Anonymous wrote:

From a totally different bank that offers it:

"When your employer processes payroll, they submit files to the Federal Reserve notifying them how much each employee will be paid that week. The Federal Reserve sends that information to us every day to let us know how much and when you’ll be paid. Instead of waiting until your payday to deposit the funds, we make that money available as soon as we receive the notification. For many Chime Members, we receive a notification on Wednesday for a Friday payday (which means Chime Members are getting paid two days earlier than everyone else at the office)."

https://www.chimebank.com/2017/08/22/this-is-how-chime-helps-you-get-paid-early/

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Thanks for that, it gives more detail than DCU. But every employer sends files to the Federal Reserve notifying them how much each employee will be paid that week??? That must be hundreds of millions of transactions! Is it a federal law that every employer has to notify the Federal Reserve how much each employee will be paid that week???

And that Chimebank site is a strange banking site. I was trying to check what interest rate or other things they offer to consider banking with them, and got better results Goggling it.

[garagebandking]

I don't know about payment notifications being sent to the Federal Reserve...that does seem like an awful lot of transcations to post there, but computers are pretty powerful, so who knows.

My experience is, that with some CUs...and I had a DCU account for a year or so and now use PF as my primary bank...my pay was basically posted the day someone (Fed Res or ADP or whatever) sent it electronically to the bank...which was the Thursday of the pay week (so a day early for me since everybody was paid on Fridays).

[minski]

I've wondered the same.

Alliant has started listing my direct deposit as pending (but not yet completely available as far as I know) on Wednesday when I generally get paid Friday. Prior to that, it showed up as pending on Thursday. I appreciate knowing two days before how much my paycheck will be so I can budget accordingly. 

[EAJuggalo]

As to why banks don't do this, the money isn't actually credited to the bank until Friday.  What the CUs are doing is basically giving you a one or two day loan.  They know it's going to be there so there is very little risk to them to do something which makes their members, who are in fact the owners, happy.

[916networktech]

Fidelity give the money to you earlier.  I have worked for a small and large company Fidelity does not hold on to the money the moment the company puts the money through you get it the next day...

Sometimes Fidelity would give it 2-3 days earlier. 

[K-in-Boston]

Just the way that ACH transactions work.  I have a distribution to my NFCU checking and it's always credited the day before BoA.

[MakingProgress]

My bank credits my direct deposits one day early if they have a notification it is comming.   However the key is if they have a notification.   Both my daughter and I get paid on Thursdays, have accounts at the same bank, but work for different employers.  My direct deposit is always there first thing Wednesday morning (one day early), her is usually there around 4 p.m. Thursdays.   I assume her employer dosen't get payroll processed as quickly so the notifications from them arrive later in the day. 

[j615]

A couple co-workers have been paid 2 days prior to scheduled payday on prepaid cards as well, which is interesting. I believe they were NetSpend cards.

Our pay stubs are generally posted to our online portal 2 days before payday also.