What Is a Direct Deposit?
Direct deposits are used to electronically move money from one bank account to another. Employers use them to pay their employees without having to use and take manual deposits of paper checks.
Direct deposit is more convenient and secure than receiving and depositing a paper check, as it usually happens much quicker than getting your pay and cashing it if you receive and deposit a physical check. Government benefits, tax refunds, and other periodically recurring payments can also be received through direct deposit.
When Does Direct Deposit Arrive?
The majority of the time, funds will be electronically transferred based upon the schedule set up (for example Pay-Date) and typically will become available by the following day, when the system will show that they have been processed. Employees will usually be able to access their funds with no delays, as a result of the Automatic Clearing House (ACH) system, by which banks process their transactions.
How Long Does Direct Deposit Take?
Although the transaction is done electronically, there are many different variables concerning how and when funds can be accessed:
- Payroll from your place of employment - Many employers can process payroll 1-2 days ahead of when it would normally happen.
- Deposit times of various banking institutions - Different banks sometimes process and post deposits at different times.
- Weekends and Federal Holidays - Funds are generally not processed by ACH method on holidays and weekends.
- Business software for scheduling paycheck deposits - Business software may create a payroll schedule to ensure all paycheck deposits coincide with regular paydays not several business days after payroll.
Generally, most employees will be able to access any funds deposited into their checking account the same day that they appear in their account. In some instances, they might not have access to those funds until the next business day.
How to Set Up Direct Deposit
Putting in a Direct Deposit is simple. Usually when your employer sets you up for Direct Deposit they will give you a Direct Deposit form with the following information needed:
- Completing a form with your name and employee number and other ledger info.
- Providing your Bank Account Number and Routing Number.
- After doing the above two, the employer may have you verify your deposit. They might do a test deposit to make sure you did everything right.
- Completing the above, you may have to attach a Deposit Slip or other documents to send back to payroll.
Once the employer has processed your request, all future pay or payments will automatically be deposited into your bank on a scheduled payday.