Receiving your paycheck without having to visit the bank has become very popular. Direct deposit is a method of Electronic Funds Transfer that many employers offer for their employees for convenience purposes. There are a number of benefits of using direct deposit to receive your pay.
When you receive your paycheck via direct deposit, most of the time you will have access to your money up to a full day earlier than if you waited for your paper check. This is perfect for people who like to use their bank's automatic payment feature. You can schedule your payments to be withdrawn on your official payday (Friday, for example) without fear of overdrafts, knowing that the money has cleared and is actually available by Thursday.
Receiving a direct deposit is extremely convenient as it eliminates the need to visit your bank weekly. For people who don't drive by their bank during their regular commute, this saves an unnecessary trip, time, and gas expenses. Instead of waiting in line inside the bank for an available teller, or sitting in a line of cars at the drive thru, you can simply go about your business and access the money via your debit card or checks. The elderly who may not get out as often as they used to often find direct deposit to be extremely useful.
Direct deposit also makes it easier to save your money. Most consumers using direct deposit designate a specific dollar amount or a percentage of their income to go into a savings account or money market account; while the rest is placed in their checking account for their expenses. When you have the money divided and deposited automatically, you are paying yourself first – and are far more likely to stick to a savings plan when you don't ever “see” that money. Think about it, if you don't use direct deposit and cash your paycheck each week – are you disciplined enough to manually move $50 or whatever your savings amount is? Or do you wait until you pay your bills and see if there is any money “left over” to save? Using a direct deposit to automatically grow your savings is one of the biggest advantages available to you.
On the other end of the process, direct deposit is also saving employers and agencies considerable time preparing and handing out individual paper checks. The Social Security Administration, for example, has to process millions of payments every single month – so the more people who elect to receive their payment via direct deposit, the less time and expense required to make those payments. Many government agencies are using direct deposit, including the Internal Revenue Service (you may have gotten your tax refunds via direct deposit); the Unemployment office, and the Veteran's Administration office, among others.
Direct deposit is quite simple to set up. If your employer offers direct deposit for your paycheck, call or check with your bank first to make sure they accept Electronic Funds Transfers and what the guidelines are. You will then need to visit your company's human resources department or the accounting department to give them the details for making the direct deposit – typically this requires your routing number and bank account number. You'll then designate how much money to put into each account, or if you want to receive 100% of your pay into a single account. It typically takes two pay periods before your direct deposit is set up.
To receive direct deposits from government agencies, visit their website to get the details or call them for the requirements and how to set it up. You can often set it up by phone, internet, or by mailing in a simple form.