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Ken Tumin founded the Bank Deals Blog in 2005 and has been passionately covering the best deposit deals ever since. He is frequently referenced by The New York Times, The Wall Street Journal, and other publications as a top expert, but he is first and foremost a fellow deal seeker and member of the wonderful community of savers that frequents DepositAccounts.

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Methods to Make Deposits to Your Internet Bank Accounts

As I described yesterday, internet banks have several advantages over a brick-and-mortar bank. However, one downside is that making deposits is not as straightforward. There's no branch where you can make a deposit directly into your account.

ACH Transfers

The deposit method that I've used the most for my internet bank accounts is a two-step process. It requires that you have an account at a brick-and-mortar bank or credit union. In your internet bank account you establish a transfer link with that brick-and-mortar bank account. This typically involves providing the internet bank the routing and account number of your brick-and-mortar bank. Most internet banks require a verification step which involves a trial deposit made by the internet bank to confirm you own that account.

Once you have a transfer link established, you are ready to make deposits into your internet bank. First, deposit checks and cash into your local bank. Once those funds are available, you log into your internet bank account and initiate an electronic transfer to pull those funds. This is often called an ACH transfer, bank-to-bank transfer or an electronic funds transfer.

There are a few downsides to this ACH transfer deposit method. First, you may not always be able to travel to your brick-and-mortar bank or credit union. This is one benefit of choosing a credit union that's part of a shared branch network. If your credit union is part of the shared branch network, you can make a deposit at other credit unions in this network which gives you access to credit unions around the nation (see post).

Another downside with the ACH transfer deposit method is that you have to maintain that brick-and-mortar bank account. If it's not a free checking account, you may be charged monthly service fees.

The third downside with the ACH transfer deposit method is the delay. There are two sources of delay. First, the brick-and-mortar bank will likely put a hold on your check when you make the deposit. During this time, the money isn't available. You'll have to wait for the hold to end before you can pull the funds with an ACH transfer. Once the funds become available and you initiate the ACH transfer, you'll then have delays in the ACH transfer process. Some internet banks have fast ACH transfers which can take only one or two business days. Others can take 4 to 5 business days.

Deposits by Mail

Another method to make deposits into an internet bank account is by mail. This is usually limited to just check deposits. Several internet banks such as Ally Bank and PerkStreet Financial offer postage-paid envelopes.

The downside with mailing in your deposits is the delay and the risk of the mail getting lost in the mail. Some internet banks offer free overnight delivery through UPS Stores and/or Mailboxes Etc. PerkStreet Financial allows free deposits using either of them. USAA Bank's service called Easy Deposit uses UPS Stores.

Remote Deposit with a PC or Smartphone

The future of check deposits is remote deposit capture which allows you to scan your checks and deposit them online using your PC or smart phone. This is growing in popularity. Some of the internet banks that have this now include EverBank, Bank of Internet USA and First Internet Bank. Ally Bank has been testing its new service on select customers, and ING Direct is working on it. USAA Bank has long offered its remote deposit service called Deposit@Home and Deposit@Mobile, but it limits this service to those who have a military connection. That's one problem with this service. Not all customers may qualify, or it may take more time to qualify for the service. Another downside is that they may limit the size of the check that can be deposited.

Several credit unions also offer remote deposit. Some of these include Alliant, PenFed and Digital Credit Union. I have more details in my Survey of Banks and Credit Unions with Remote Deposit.

Depositing Cash

One issue with both mailing deposits and remote deposit is that they are only for depositing checks. They're not applicable for depositing cash. When I asked an Ally Bank CSR about how to deposit cash, I was told that I would need to purchase a money order, and then send that in for deposit the same way I would for a check. The downside of this is that there is usually a fee for the money order. PerkStreet Financial describes in its FAQ how MoneyGram ExpressPayment (available in Wal-Mart stores) can be used to deposit cash, but I was told by a PerkStreet CSR that they don't cover MoneyGram charges. I've just been told that MoneyGram ExpressPayment is free for PerkStreet customers to make cash deposits into their accounts.

One other way that you may be able to deposit cash is with ATMs. Some ATMs have a deposit capability, and some newer versions are able to deposit cash and checks without envelopes. When I asked an Ally CSR about this, I was told that wouldn't be possible even if the ATM supported it. To make deposits at an ATM, it appears that the deposit-capable ATM must either be owned by your bank or it must be in a network in which your bank is part of. The CO-OP Network has 1000's of deposit-taking ATMs in 7-Eleven stores. Many credit unions are part of this network.

Even if you can use a deposit-taking ATM, you may not want to. If the ATM gets jammed when you feed it your check or bill, it can be a hassle to resolve the issue.

What Method Do You Prefer?

I've always had free checking accounts at local credit unions or banks. Consequently, ACH transfers have always been my preferred method of making deposits to my internet bank accounts. I'm not a fan of mailing checks or using ATMs for making deposits.

What methods have you used to make deposits into your internet accounts? And how do you make cash deposits?

Edit 3:00pm 10/12/11: Updated info on MoneyGram

Related Pages: Ally Bank, checking account

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  |     |   Comment #1
Making deposits in order of preference:

1. Checks/cash deposited to brick-and-mortar bank/credit union. Their ATMs do not accept deposits in my area.

2. ACH (Actually transfers of funds).

3. Mail checks.

4. Scan check and then secure email (Have not tried this one yet, although at least one of my credit unions allows for this method).

  |     |   Comment #2
I make deposits often and then send them to my internet bank.  It's super easy--especially once you've done it a couple of times.  I go to one of my local banks or credit unions (I made sure to open accounts at the nearest banks and CUs that offer FREE checking and savings).  I make my deposit.  Then, as soon as I'm home, I transfer the money (via ACH) to my favorite Internet bank--Discover Bank.  They get the deposit within 3 business days, so I try to make all deposits by Tuesday of each week if I can (so that the money is at Discover Bank by Friday).  It's actually kind of FUN to do this.  Really!
  |     |   Comment #3
Charles Schwab Bank also offers mobile deposit.
  |     |   Comment #4
I have about 20 deposits a month going to three different institutions (one bank and two credit unions). All three of these institutions do not maintain a local branch nor do I have a local bank or credit union. All movement of money is via ACH. Any checks are either scanned or deposited via an "honor system". Very little cash is ever received and when it is I can spend it easily. One Credit Union makes deposits either via the "honor system" or ACH (Pull) immediately available for further use. Been doing this for over 6 years. Can live just fine with out a local financial institution.
  |     |   Comment #5
I deposit checks to my Capitalone account by mail.  They offer postage-paid envelopes.  But they need a lot of personal information to complete the order of envelopes.  Even when I call from my home phone (already registered with Capitalone), they still need my full name, address, account number, social security number and birthday.  Each order is limited to 5 envelopes. 
  |     |   Comment #6
amscot offers free money orders. although who works with cash anyway?
  |     |   Comment #7
I have a local brick and mortar that's gone from free to fee-based checking. However, I also have a mortgage with them since recently, so it's a free checking acct. again.

Deposit checks there (inside the grocery store I go most often with extended banking hours incl. weekends) with the nice ladies in the branch. Then either ACH to Ally (and then from there to some RCA) or make a billpay to myself at my main bank (American Bank).
  |     |   Comment #8
Just to clarify, although there are many deposit-taking ATMs in 7-Eleven stores, most 7-Eleven ATMs do not accept deposits.
  |     |   Comment #9
Anyone know if you can make a deposit at any SUM-ATM into a checking or savings account that' is in the SUM network? How about the NYCE network? How about the Allpoint ATM network? How about the STARsf? Are there other internet banks that allow making deposits at MailBoxEtc and UPS stores? Is it safe to give the Moneygram retailer, like walmart, your checking account # and bank info?
  |     |   Comment #10

there would really better info obtained at each of those
  |     |   Comment #11
I get a money order every month from a renter who does not have a bank account. I have Ally Bank and USAA and both offer me remote deposit but Unfortunately, I can't use either of those banks remote deposit to deposit Money orders. Checks yes, money orders, no. I have to either mail the Money order or use my brick and mortar bank to deposit it.
  |     |   Comment #12
If it's a postal money order you can also cash it at any post office for free
  |     |   Comment #13

Yes, that is an option but in my case it would just be an extra step as I would then need to deposit cash at that point. I am hoping that when ING Direct releases their remote deposit, it will accept money order scans. I have noticed about 1/2 of banks' remote deposit systems will let you scan a money order. Some will, some wont... something about the ink darkness on money orders.
  |     |   Comment #14
Hi...I mostly transfer nonies through the ACH method, but in some cases I've deposited the money in my TD Bank free checking account (in person since I live across the street) and it becomes available the following day! so I then send the money to the bank or CU...as a bill paying!  All for free!   lol!
  |     |   Comment #17
16 either very deep pockets or way to much time on your hands
  |     |   Comment #22
I did not open all; as I am also considering Ally Bank, HSBC and First Niagara Bank, Discover Bank, BBVA Compass Bank (smartypig), Webster Bank, and a few other nationally and state chartered banks.
how much time
  |     |   Comment #23
will you spend on all these accounts  is it really worth it
  |     |   Comment #24
Ally Bank allows deposits into checking acct. by scanning your endorsed check and sending via internet. Have been doing this for a couple of weeks now. Once approved for this kind of transaction, it saves much time and effort. 
  |     |   Comment #25
Charles Schwab Bank's mobile deposit service requires a credit check and seemingly requires a stellar credit rating to qualify. They don't disclose that on their web site.

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