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Direct deposit streamlines how you receive your paycheck along with several other benefits. According to the ‘Getting Paid In America’ survey conducted in 2023, 95% of employees in the U.S. use direct deposit to receive their paycheck. The widespread use of this payment method suggests direct deposit offers benefits beyond mere convenience.
Simply put, it’s an automatic deposit into your account instead of depositing a paper check and waiting several days to get your money.
Many people use this form of payment because it removes the added step of depositing a physical check into their account. With the rising popularity of online banking, direct deposit allows people to bank without having to find an ATM or visit a branch.
A paycheck is not the only form of payment that can be set up with direct deposit. There are many other regular payments that can be made via direct deposit such as:
Government benefits such as Social Security
Pensions
Child support
Income from rental properties
Sales commissions
Dividends from investments
For some payments you can even set up percentages to deposit into different accounts. You don’t have to be an employee to enjoy the convenience of direct deposit.
Direct deposit provides convenience, security, is environmentally friendly, can get you paid faster, and may qualify you for bonuses.
One of the most obvious benefits of direct deposit is convenience – but it goes further than just saving you a trip to the bank. Because a direct deposit payment is an automated clearing house (ACH) transaction, the money is passed from one bank to another.
This type of transaction, unlike the processing of a physical check, doesn’t require a hold period and is instantaneous. This means that you get your money as soon as possible.
Another benefit of direct deposit is security. If you receive payments by check, it makes you vulnerable to security risks like losing the check or having it stolen.
Also, having your payments automatically made to your account reduces the risk of check fraud, the practice of stealing or forging checks.
One benefit of direct deposit that is not typically considered is how it’s more environmentally friendly than a check. According to the Environmental Protection Agency, the largest percentage of solid waste in the U.S. comes from paper products.
By eliminating the need for paper checks and envelopes, you can reduce your carbon emissions. Furthermore, saving a trip to the bank cuts down on gas and vehicle emissions.
Many financial institutions offer special promotions or bonuses when you opt for direct deposit. Check your bank's account bonuses to see if you qualify.
By enabling direct deposit, you can enhance the way you plan your finances. Direct deposit will typically deposit automatically at the same time and day each pay period.
Because this occurrence is consistent, you can plan when to make payments or savings deposits knowing your paycheck will already be in your account.
Setting up direct deposit is simple. Just request a direct deposit form from your employer. This document will typically require you to provide your bank account number and your routing number.
Once you fill out this form and submit it to your employer, they will set up direct deposit for your paycheck. The only thing left for you to do is to double-check the deposit to ensure it is correct.
For quick answers to your direct deposit questions, see the FAQs below.
How long does direct deposit take?
Depending on the institution you receive payments from, direct deposit takes 1 to 3 business days for the money to appear in your account.
How does direct deposit work?
The person making the payment gathers your bank information then initiates an ACH transaction that will be deposited into the account you specify.
Why is direct deposit late?
While it’s rare for direct deposit to be delayed, it could occur due to a payment being made during a bank holiday or for an amount that’s larger than normal. If your direct deposit is delayed, contact the company in charge of processing the payment.
What accounts can receive direct deposit?
You can receive direct deposit into savings and checking accounts. You may even want to split your deposit between accounts to streamline your savings.
How do I set up direct deposit?
It’s easy at UFB Direct. Simply log in to your account, navigate to Profile and Settings, and select Direct Deposit. It only takes five minutes.
If you can, check with your employer’s payroll office. They may have an online form. If not, complete the direct deposit form and give it to your employer’s payroll office.
There are numerous reasons why people opt for direct deposit to receive their paycheck, investment check, or pension. Simplify your banking, regardless of whether you receive a paycheck or not, by setting up direct deposit for your accounts.
This insight was published by UFB Direct on July 11, 2024 and last updated on July 11, 2024.