Survey Says - Pay Electronically and You'll Be a Better Saver

"People who save using electronic payments are usually more consistent and committed savers," said Diane Freeman, 2007 chairman of MMG and FedACH product manager at the Federal Reserve Bank of Atlanta. "Once you set up direct deposit or direct payment, the money goes into your savings account automatically each month. You are less likely to notice the deduction if this happens automatically versus manually.

"Most employers will split direct deposit of an employee's pay into several different accounts including a savings account," continued Freeman. "If an employer doesn't offer this, financial institutions can set up electronic transfers of money from checking accounts into savings accounts via direct payment."

MMG, led by NACHA, Electronic Payments Network (EPN) and the Federal Reserve Banks, is sponsoring Direct Deposit and Direct Payment Month in May to encourage financial institutions and businesses to actively promote this message to their customers and employees. Employees can also play a role by asking for these services from employers, investment companies and financial institutions.

Most people who are offered direct deposit for their pay use it. However, many small and medium-size businesses don't use direct deposit to pay their employees. "We encourage employees to ask their employers, regardless of size, to offer direct deposit. It should be a component in every employee's benefits package," said Freeman.