When you’re completing the onboarding process for a new job, you’re often ask if you’d like to sign up for direct deposits. This electronic payment method may seem daunting, but it provides a wide range of benefits for both you and your employer. In this article, we explain what exactly direct deposit is, describe how it works, explore the steps you need to take to sign up for direct deposit, and discuss how long it typically takes to reach your bank account.
What is direct deposit?
Direct deposit is a payment method that electronically transfers money from one bank account to another. This eliminates the need for physical checks, allowing you to get paid faster and easier. Most of the time, the term “direct deposit” refers to getting your payroll checks electronically deposit into your bank account, but it’s also available for other types of payments, like tax returns.
Advantages of direct debit
Switching to direct deposit has several advantages, including:
Transactions are completed much faster
In many cases, those who cash by direct deposit receive their funds sooner than those who rely on physical checks. This is especially true if the check is mailed to you because you no longer have to wait for it to arrive at your door.
In addition, you save time because the payment arrives directly to your account without having to take it to your bank to deposit the funds and then wait for them to be cleared.
Making payments digitally is safer
When you pay digitally, there’s no risk of someone stealing your check, cashing it, or trying to cash it. Instead, funds are safely and seamlessly moved from one bank account to another.
Electronic records take up less space
With direct deposit, each party has a record of the transfer in their bank account transaction history that is easy to track and refer to when needed. This eliminates the need to keep pay stubs or write down transaction details, allowing you to avoid organizing paperwork in bulky filing cabinets.
Direct deposit can save resources and money
Direct deposit eliminates having to buy checks, mail them, and drive to the bank to cash them, saving valuable resources and time. Plus, receiving electronic payments is often free, and sending funds via ACH can actually be less expensive than some of the other options.
Digital payments are convenient
After initially enrolling in direct deposit, you generally do not need to take any further action upon receiving the funds. These payments are automatically add to your account, whether you’re on vacation or unable to go to the bank.
How to sign up for direct debit
If you’ want to set up direct deposit, you can follow these easy steps:
Find out the process of the other party
Whether you arrange direct deposit with your employer, a government institution, or a vendor, there are often forms and processes that are specific to your organization. Find out what you need to do to process your direct deposit request and gather the necessary materials. When it comes to setting up payroll direct deposit, you can usually talk to a human resources representative or your boss to determine the steps you need to take.
Supply the necessary information
Although processes and forms may vary between organizations, the information needed is often the same. You usually have to provide basic details such as your:
- Bank’s name
- Bank’s address
- Bank routing number
- Account number
Keep in mind that your account and routing numbers are sensitive information. That needs to be keep secure, so only share them with institutions and people you trust.
Provide a voided check
Organizations sometimes ask for a voided check during the direct deposit setup process. So they can verify the information you’ve provided.