What is direct deposit

As soon as payday arrives, your paycheck shows up in your account and you can spend it immediately. Many employers let you split your direct deposits between multiple accounts, which allows you to set up automatic savings plans.

The process for setting up direct deposit varies slightly from employer to employer, but your HR or payroll department should be able to help you get things started.

Most banks list your account and routing numbers in their online banking portals. You can also view these numbers on the checks that came with your checking account. The routing number is typically the first number on the bottom left of your check.

It should include nine digits. The next number is your account number. Some employers will want a voided check when you set up direct deposit to confirm your account information. That means bringing your checkbook with you when setting up direct deposit is a good idea. To void a check, simply write VOID on it in large letters, or in smaller letters multiple times in the important fields, like the payment amount. One of the most common perks is a maintenance fee waiver.

Some banks charge monthly fees on checking accounts, but commonly waive the fee if you maintain a sufficient balance or receive a direct deposit each month. Other banks offer higher interest rates on checking or linked savings accounts if you meet certain requirements. Making a minimum number of debit card transactions and receiving direct deposits are common requirements. Some banks and challenger banks like Chime even give you early access to your paycheck. Your employer will usually send your paycheck to the bank a few days ahead of payday to give the transfer time to process.

These banks release the money as soon as the transaction clears rather than making you wait until payday. Given that direct deposit is convenient and saves you the effort of depositing your paycheck on your own, these perks just provide more reasons to set up direct deposit. Alternatively, many online banking services provide account holders with direct deposit information that you can provide to the payor, including a form you can download and use in place of a void cheque.

Enter your keywords. Languages en fr. The easy way to get paid electronically Direct deposit is a fast, secure and convenient way to receive payments, an example of this is having your pay cheque deposited directly into your bank account. Overview FAQs How to sign up for direct deposit Salaries and government payments are examples of payments commonly made through direct deposit. Search submit. What happens if I change bank accounts? Once the funds are in my account, can a direct deposit be reversed?

You can open yourself to legal action if you keep funds that don't belong to you. I received a direct deposit in my account and I don't know what it's for, or who it's from. How can I find out? Contact your financial institution so they can investigate. What is a direct deposit? What are the benefits of direct deposit? What are some examples of direct deposit? I Accept Show Purposes.

Your Money. Personal Finance. Your Practice. Popular Courses. Personal Finance Banking. What Is Direct Deposit? Key Takeaways Direct deposit is the deposit of funds electronically into a bank account rather than through a physical, paper check.

It requires the use of an electronic network that allows deposits to take place between banks called the automated clearing house. Payees must provide the payer with their banking information or a void check in order to receive direct deposit payments. Salaries, tax refunds, investment redemptions, and government benefits are commonly paid through direct deposit. Same-day funds is a term for money that can be transferred or withdrawn the same day that it is deposited into the recipient's bank account.

Wire Transfer Definition A wire transfer is an electronic transfer of funds across a network administered by hundreds of banks around the world. Pay to Order Definition Pay to order refers to negotiable checks or drafts paid via an endorsement that identifies a person or organization the payer authorizes to receive money. Understanding Checks A check is a written, dated, and signed instrument that contains an unconditional order directing a bank to pay a definite sum of money to a payee.

Transit Item A transit item is any check or draft that is issued by an institution other than the bank where it was initially deposited. Clearing Clearing is when an organization acts as an intermediary to reconcile orders between transacting parties. A clearing bank approves checks for payments. Partner Links. That's ACH. With ACH, personal information is more secure. With ACH, payments are processed fast.

Direct Deposit How to set up Direct Deposit with your employer:. Avoid fees and access your money quickly with Direct Deposit.