What is Early Pay and How Does it Work?

There are many benefits to receiving your paycheck early, from gaining access to your money sooner to improving your cash flow and reducing your reliance on other financing such as credit cards or personal loans.

In this article, we’ll explore the basics of what early pay is and how it works, as well as answer several key questions you may have about the program as a whole.

What is Early Pay?

Early Pay (sometimes referred to as early direct deposit) is a service offered by some banks and financial institutions that gives you access to your paycheck and other direct deposits up to two days earlier than your normally scheduled payday.

Because many Americans receive their paychecks and other direct deposits (such as Social Security payments or VA benefits) either at the very end or the very start of each month, it can sometimes be a struggle to pay bills such as rent on time due to a mismatch in when you get paid and when the bills are due.

For example, imagine that you have rent or a mortgage payment due on the first day of every month and are also scheduled to be paid on the same day by your employer.

Under normal circumstances, you may end up scrambling to ensure you can pay your bills on time due to the tight time constraints, which may become even more restrictive if the last day of the month falls on a weekend.

However, with your bank offering Early Pay you may be able to gain access to your paycheck sooner, reducing the time pressure you’ll feel at the end of every month, improving your cash flow and ultimately reducing your stress.

How does Early Pay work?

Early Pay works by giving you access to your direct deposit funds up to two days before the normally scheduled payment date.

The exact time frame for how early you receive the funds, however, will depend on when your employer or the issuer of the direct deposit provides instructions to your bank about the payment.

To break things down further and use a paycheck as an example, there are several steps that need to take place between your employer and your bank before you receive the funds at the end of each pay period:

1. First, your employer will need to run payroll to determine how much money they owe you, minus any taxes or deductions for things such as 401(k) contributions.
2. Then, your employer will instruct their business banking partner to send the funds to all employees through an electronic funds transfer (EFT). This transaction will be processed by an Automated Clearing House (ACH) network, which will generally bundle several transactions together and process them at regular intervals throughout the day.
3. Once the clearing house processes the transaction and sends it to your bank, your bank will finalize the direct deposit internally, verify that the transaction is authentic and move the funds into your account.

The entire process, from your employer running payroll to the funds being made available in your account, typically takes around one to five business days.

However, the key thing to note is that the actual transfer of funds from your employer’s bank to your account is near-instantaneous.

Most of this one-to-five day window, then, is taken up by the various processes and checks embedded into these transactions by financial institutions to prevent fraud and ensure funds are transferred accurately and safely.

As a result of this process, your bank can make these funds available early—provided they come from a trusted source (such as your employer) on a regular, predictable schedule—because they’re able to see the transaction from the moment it’s issued by your employer.

Frequently asked questions about Early Pay

At face value, Early Pay is a relatively simple service.

If a bank receives direct deposit information early, they can make those funds available to their customers up to two days prior to the scheduled payment date.

However, there are a few nuances you should be aware of, as outlined below.

Are all my direct deposits eligible for Early Pay?

Most recurring direct deposits are eligible for Early Pay. This includes your salary or paycheck, social security payments, pension payments, VA benefits and any other direct deposit that occurs on a regular schedule.

Often, your bank will want to see at least three months of history for the direct deposit in question before they will turn on Early Pay.

For this reason, infrequent direct deposit transactions (such as quarterly, yearly, or irregular payments), as well as one-off transactions, are generally not eligible for Early Pay.

Will I be charged to sign up for Early Pay?

No. Associated Bank does not charge a fee for eligible direct deposits.

How will I know when the money is deposited into my account?

In most cases, you’ll want to set up a digital banking alert to know exactly when the money lands in your account.

For example, you could set up an alert to text you whenever a new deposit or credit is made into a specified account (such as when an early pay direct deposit lands in your checking account).

Will I always receive my paycheck a few days early?

There are no guarantees that you will receive your paycheck early.

As stated above, the timing of when you’ll gain access to the funds in your direct deposit will depend on how early the issuing business or entity starts the transaction.

If they submit all the paperwork and instructions two days ahead of schedule, you will likely be paid two days ahead of schedule.

However, if they submit everything on the day that the payment is due, you will likely receive the funds on the normally scheduled payment date, regardless of whether you signed up for early pay with your bank.