A Newcomer’s Guide to Managing Money Ways to receive your money

You can receive your wages in different ways, for example, you can be paid in cash, paper paychecks, direct deposit, or with a payroll card.

Each of these ways to receive money has some potential benefits and risks, especially when it comes to fees, security, and convenience. Knowing how these products work, how much it costs to use them, and when you’ll be charged extra fees can help you make the most of your money.

Cash

Definition Benefits Risks

Cash is money that you have in hand.

Tip: Avoid carrying around or leaving in your home large amounts of cash. If cash is lost or stolen, it is difficult or impossible to get it back.

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▪ Accepted almost everywhere. ▪ Difficult or impossible to recover

if lost or stolen.

▪ Can be tempting to spend cash on hand.

▪ Can be hard to track spending for personal budgeting purposes.

Paper paychecks

Definition Benefits Risks

Paycheck is a check for your salary or wages made out to you.

▪ You can deposit into a checking or a savings account. A bank or credit union where you have an account will also cash your paycheck for free.

▪ Safer than carrying cash. If lost or stolen, your employer may cancel and reissue the check if you report it quickly enough.

▪ If you do not have a bank account, you may have to pay to cash your paychecks.

▪ If you deposit a paycheck in a bank or credit union account, you may not be able to access all the funds immediately.

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Direct deposit: Checking or savings account

Definition Benefits Risks

Your salary or wages are sent straight to your bank or credit union account electronically without the use of a paper check. May not be offered by all employers.

Tip: Ask your employer how to arrange for direct deposit. Generally, if you receive your pay through direct deposit, your funds will be available to withdraw at least as soon as if you had deposited a paper check, and often sooner. In many cases, your money is available on your payday.

Be aware of ATM fees you may be charged. Generally, you can avoid ATM fees by using your own bank or credit union’s ATMs.

▪ Reduces your risk of loss or theft, compared to carrying cash or getting a check.

▪ The account has consumer protections for funds taken by electronic error or theft.

▪ Funds are usually available to you immediately.

▪ Funds can be accessed via a debit card, ATM card, or personal checks.

▪ Many employers allow you to split your deposit between a checking and savings account. This can help you build savings.

▪ There are no fees to deposit your check. Many banks and credit unions also offer checking and savings accounts with no monthly fees when you set up direct deposit.

▪ Keeping your money in a bank account requires you to go to an ATM or storefront location to withdraw cash when cash is needed.

Payroll cards

Definition Benefits Risks

Prepaid debit cards arranged by an employer. Your salary or wages are automatically sent to your payroll card electronically, without the use of a paper check.

Tip: Your employer can’t require you to receive your wages on a payroll card. They have to give you at least one other option (which might include check, cash, or direct deposit to your bank or credit union account).

▪ Reduces your risk of loss or theft, compared to carrying cash or checks.

▪ The payroll card has consumer protections for funds taken by electronic error or theft.

▪ Many cards charge fees for inactivity, purchases, ATM use, monthly fees, etc.

▪ Potential overdraft fees if employee uses card without enough funds.

▪ You have to go to an ATM or storefront to withdraw cash when cash is needed.

▪ There may also be fees if you don’t use ATMs from the bank or credit union that issued the card.

▪ You may not be able to deposit other funds in the account.

WAYS TO RECEIVE YOUR MONEY

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Prepaid cards

Definition Benefits Risks

Your salary or wages are electronically sent to your prepaid card without the use of a paper check.

▪ May be safer and more secure than carrying cash or checks .

▪ The card does not have the same consumer protections as a checking account or payroll card for funds taken by electronic error or theft.

▪ You might be limited in the types of transactions you can use the card for. For example, you might not be able to use your prepaid card to pay bills.

▪ Many cards charge fees for inactivity, purchases, ATM use, monthly fees, etc.

▪ You have to go to an ATM or storefront to withdraw cash when cash is needed.

 Online

consumerfinance.gov/askcfpb

 By Toll phone

free: (855) 411-CFPB (2372) TTY/TDD: (855) 729-CFPB (2372) 

By Consumer mail

Financial Protection Bureau P.O. Box 4503 Iowa City, Iowa 52244 

Submit a complaint consumerfinance.gov/complaint

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