These days, more and more of us are handling our money matters from our phones. Splitting a dinner tab with a friend, depositing a check, transferring funds: All you need is a mobile device, a secure internet connection, and you’re golden.
Which makes perfect sense, considering how our phones have changed the way we do, well, just about everything. You can order NYC bagels to be delivered to your doorstep the next day or send live video footage to someone across the world.
But back to banking: Mobile banking has soared in popularity in recent years. In fact, two-thirds of all banking customers are conducting their business digitally, whether via a computer or a mobile banking app.
Many mobile banking apps allow you to transfer money between accounts, pay bills, check your account balances, and make mobile deposits. The latter is a huge convenience. In years past, a person either had to turn up at a bricks-and-mortar bank branch with a check or deposit it at an ATM. Now, you can snap a couple pics of your check on your phone and voilà! Your check is deposited.
It may seem like magic, but it’s actually technology at work. It’s worthwhile to take a closer look and understand:
• What is a mobile check deposit?
• How does mobile deposit work?
• What are the pros and cons?
How Does Mobile Banking Work?
Mobile banking is a service provided by a financial institution, like a bank, that allows its customers to conduct transactions, such as checking an account balance, using a mobile device. This is somewhat different from internet banking, which generally refers to banking done on a computer or laptop.
The primary difference between internet banking and mobile banking is that mobile banking uses an app, aka software designed specifically for a mobile device. Customers using a computer would log onto an online portal to access their accounts using their internet browser.
It is possible to use a smartphone’s internet browser to log into the online portal, but a bank’s app generally provides a better and faster user experience, as it was specially designed and built to be used on a smartphone or tablet. “Mobile banking” refers specifically to the use of a bank’s app.
What Is A Mobile Check Deposit?
The latest iterations of mobile banking have made the use of mobile deposit widely available. With mobile deposit, you’re able to deposit a check into your account using your phone’s or your tablet’s camera.
Most financial institutions require that, once you’ve opened their app, you type in the amount of the check and take a photo of both the front and the back of the check. Before you do this, be sure to endorse the back of the check. Some banks may also request that the depositor write “For Mobile Deposit at [Bank] Only” or something similar.
The app generally lets you use this feature 24 hours a day, although some banks may only make a same-day deposit up until a certain hour, like 10:00 pm. Every bank will be different, but most banks will deposit a check quite late in the evening, even if they won’t allow 24 hours.
How long do mobile deposits take to clear? Deposits may show up immediately, later on the same day, or the next day. Sometimes, they’ll be fully available and sometimes partially, depending on the rules of your bank. For example, say you make a mobile deposit worth $3,000. Your bank may make $500 available immediately and the remaining $2,500 available in two business days.
Each bank is going to have its own “funds availability” policy, though there are some federal regulations on how long a bank can place a hold on a deposited check. (For example, a bank cannot place a hold on a check valued at less than $200.) A bank can always have rules that are less strict than the federal rules, and release the funds for use sooner. Again, it is always going to depend on the bank, so be sure to ask.
Some banks may have one-day or monthly dollar limits on mobile deposits (like $10,000 per month). Others may have limits on the size of checks that they are willing to cash over mobile deposit. For example, some banks will not allow customers to mobile deposit checks worth more than $5,000.
How Does Mobile Deposit Work?
How does mobile deposit work? For the customer, it’s quite simple actually. All you need to do is take a picture of your check within your financial institutions app and then the information is transmitted. It’s that easy! Convenience is a major advantage of mobile banking.
When you snap that photo, a bank or financial institution will generally produce a copy of the check as a stand-in for the physical copy. Using this facsimile, a bank will work to collect the money from the check writer’s account.
Even before the bank is able to retrieve the money from the check’s source, the money is deposited into your account. Though the technology is incredible, the money itself isn’t actually moving that fast.
That produces one of the primary problems with mobile banking — folks might spend or transfer the funds before the money has fully cleared. Unfortunately, just because you use mobile deposit to put a check into your account, and you see it credited there, that doesn’t necessarily mean the funds are yours to be used.
Think of the money you see in your bank account after you’ve done a mobile deposit as placeholder money. If the bank couldn’t obtain the funds for whatever reason and the placeholder funds don’t clear, it leaves the banking customer vulnerable to bounced checks and overdraft charges. (Those are issues you want to clear up quickly, to make sure you don’t wind up with black marks or errors on your credit report.)
After making a mobile check deposit, hold onto the physical copy of your check for two weeks in case there is a problem getting the check deposited. If you need to, mark it so you know that you’ve already deposited the check.
After a couple of weeks, when the check has cleared, you should be fine to get rid of the check. As with any document that contains private bank information, do not simply put the check into the trash or recycling, where the check could be stolen. Shred or destroy the check so that no one can obtain the information.
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The Advantages of Mobile Deposit
Now that you know how the mobile deposit process works, here’s a guide to the benefits of mobile deposits.
Save Yourself a Trip to the ATM
Having to take a trip to a bank branch or ATM to deposit a check can be a real hassle. Maybe you have a busy day, you’re home with a sick kid, or it’s pouring out: Whatever the case, it’s not always so enticing to walk or drive to a bank just to get a check deposited into your account. Thankfully, with mobile deposit, you don’t need to budge from wherever you are to get that check into your bank account. This is a huge advantage of mobile banking.
Deposits Can Be Done Later than at Bank Branches
For lots of working people, getting to the bank before it closes at 5:00 pm on a weekday is difficult to do. With mobile banking, checks can be deposited at any time of day, any day of the week. You can be in your pjs, watching a streaming series, and quickly get that money deposited. That’s a major benefit of mobile banking.
Exactly when the cash becomes available to use (and in what amount) will depend on that particular bank’s rules, but many banks have extended hours for mobile deposit. Customers can generally access at least some money, even with deposits made later in the evening or on the weekends.
Deposits Are Credited Quickly
Because of the extended hours offered by mobile deposits, it may be possible to deposit a check and see the money available in your account faster than if you had to wait until you make it to a branch location. If you deposit the check during mobile deposit hours and the amount is, say, $200 or under, it is possible to see your funds immediately.
Plus, mobile check deposits are generally quicker than ATM deposits. With ATM deposits, bank staffers have to retrieve the actual checks from the ATMs and manually digitize them. When you deposit your check via a mobile app, however, it is already digital.
You Can Deposit a Check From Anywhere
Talk about convenience! Sometimes, you’re simply not anywhere near a branch or appropriate ATM but need to deposit a check. One of mobile banking’s biggest benefits is being able to deposit a check from anywhere in the world.
Let’s say you are heading out for a week-long family reunion, and you grab your mail as you are leaving. While you’re at the airport, you discover a check you’d been waiting for has arrived. No worries! You can deposit it from wherever you are (well, maybe not in-flight while at 30,000 feet) while you travel.
Deposits Are Secure
Worried about security? Many people are these days, as hackers and scammers seem to be multiplying. Here are the facts: Depositing your checks through your mobile app is as secure as any other digital banking process. Most banks and credit unions use enhanced security processes and encryption to protect their customers. Also, if you are worried that your phone might be stolen and the image of your check could potentially fall into the wrong hands, don’t. The image of a check that is deposited via mobile banking isn’t stored on your phone.
A Few Downsides
Now that you’ve heard about the benefits of mobile banking when it comes to depositing checks, let’s acknowledge that there are also a few downsides. A couple to consider:
• If you want to cash your check and get those bills in hand, you will not be able to do so via mobile deposit. The funds must go into your account.
• Your mobile deposit might wind up “bouncing.” Don’t assume that just because it’s deposited, you can go and spend it.
• There are mobile deposit frauds that occur, often in which a person or organization you don’t know well sends you a check and asks for you to deposit it and then send a portion back to them. Keep your guard up!
• Yes, security issues can occasionally crop up with mobile banking, so remember to protect your passwords and PINs; always do banking on private WiFi; and enable two-factor authentication for apps that move your money. Check your bank account often, too, to see if there is any suspicious activity.
The Takeaway
Many banks offer you the convenience of mobile deposits, which allow you to deposit a check from virtually anywhere at any time, using an app. There are many advantages to mobile banking in this way. It can save you time and energy versus taking a check in person to a bricks-and-mortar branch or an ATM. Though there are a few downsides to the process, mobile deposit is an innovative financial tool that can make banking that much more seamless.
While we’re on the subject of banking better, check out what SoFi offers. Our mobile banking app allows you to spend and save in one place, and we think you’ll like the way your money grows. When you sign up with direct deposit, you’ll earn a competitive APY, and you’ll keep more of your money, too, because we don’t charge you monthly, minimum-balance, or overdraft fees.
3 Great Benefits of Direct Deposit
- It’s Faster
- It’s Like Clockwork
- It’s Secure
As opposed to a physical check that can take time to clear, you don’t have to wait days to access a direct deposit. Usually, you can use the money the day it is sent. What’s more, you don’t have to remember to go to the bank or use your app to deposit your check.
Whether your check comes the first Wednesday of the month or every other Friday, if you sign up for direct deposit, you know when the money will hit your account. This is especially helpful for scheduling the payment of regular bills. No more guessing when you’ll have sufficient funds.
While checks can get lost in the mail — or even stolen, there is no chance of that happening with a direct deposit. Also, if it’s your paycheck, you won’t have to worry about your or your employer’s info ending up in the wrong hands.
SoFi members with direct deposit can earn up to 4.00% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 1.20% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 3/17/2023. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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