What is Direct Deposit? How To Deposit Your Paycheck Safely

Last updated 04/09/2024 by

Regardless of where you work or how you get paid, it is almost always easier to get paid digitally and automatically than waiting on a paper paycheck. You might be wondering if there is a better way out there for an employee to get paid. That is where direct deposits come in handy.

Setting up direct deposit is safe, easy, and convenient for both employers and employees. It’s no wonder that 9 out 10 U.S. workers get paid via direct deposit. Read on to find out more about what direct deposit is and how it works and how you can set up a direct deposit for yourself today!

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What is direct deposit, and how does it work?

A direct deposit allows workers to have their paychecks deposited directly into a checking account or savings account without ever having to handle a paper check.

Direct deposit simply means that your paychecks are digitally sent to your bank accounts. Your employer is the payer, and you, the employee, are the payee.

Digital payment eliminates the need to collect, safeguard, and deposit money in person. You can also use direct deposit for other forms of digital payment. This includes things like your tax refunds and other transfers.

In more technical terms, direct deposits within the United States are sent through the Automatic Clearing House network (ACH). This network allows your transaction to take place quickly and securely.

Of course, you can still request a paper check from your employer if you prefer to have a physical copy for your records. However, once you get used to the ease and convenience of direct deposit, you probably won’t feel a need to go back.

How can I set up a direct deposit?

Here are the steps you’ll need to take to get a direct deposit set up through your employer. It is quick, easy, and convenient. Best of all, you don’t have to pay anything or be a member of any clubs or subscription services.

Step one: find out if your employer offers it

First, ask your employer if they offer direct deposit. Most companies do. Typically, your employer will ask you if you prefer direct deposit over paper checks when you are first hired.

Step two: provide your banking information

Your employer will require a few pieces of information from you. Usually, you can simply give them a voided check. This will already include your bank’s information and the routing number and account number for your checking account.

However, if you do not have paper checks, you can still sign up for direct deposit by providing your:

Bank’s address
Bank’s routing number
Account number

See the picture below for a simple guide on finding your bank routing number and account number.

Submitting a direct deposit form is another option

Instead of providing the information above, your employer may have you fill out a form. This is simply a document stating who you are and where you would like to have your deposits sent. It gives your employer authorization to deposit your checks digitally. It may look something like this, although the exact appearance may vary depending on the exact information your employer needs.

Step three: verify payment

When it comes time for your first paycheck to be delivered, check your bank account regularly to ensure that the funds have been deposited on time and in the correct amount. Since a direct deposit is paperless, the payments often hit your bank account sooner than they would with a paper check! Think about how much getting that money a little earlier could help with the timing of your bill payments. And who doesn’t love the feeling of getting paid? Now you can experience it even sooner!

What if I have more than one bank account?

A common question is what to do if you have more than one account. For example, some people have both a checking account and a savings account. Others have multiple checking accounts or some combination of the two.

Surely it would be cumbersome and difficult to split paper checks into multiple accounts. However, with direct deposit, the entire process can be done digitally! Many employers offer the ability to split your paycheck into multiple accounts.

Simply provide the same information listed above for each account. Then, specify what percentage of your total paycheck you would like to have deposited into each account.

Splitting money into multiple accounts helps you save money

This is a fantastic way to save money over time. For example, you may wish to deposit 80% of your paycheck into your account and put the other 20% into a savings account. This is especially useful in growing your balance over time, saving to cover an emergency, or splurging on a big vacation or special occasion. The possibilities are endless, and it is all up to you.

How do I know my direct deposits are safe?

Some folks may question whether a direct deposit is really a good idea. They may not trust digital payments, or they may feel more comfortable having a physical check in their hands.

Rest assured that direct deposit is highly safe and secure. Hundreds of millions of people trust their paycheck to be deposited 100% digitally. Also, many banks use a similar process to pay each other or settle outstanding debts. Although the money isn’t tangible, you can be sure it will make it to your bank account safely.

In fact, direct deposits have been in use in the U.S. since 1976. According to the Social Security Administration, every payment that has ever been sent using direct deposit has made it safely to the recipient. Based on this, direct deposit is safer than the risk of losing your paper check on the way to the bank.

What if I don’t have a checking account?

Unfortunately, the direct deposit network is only available to people who have bank accounts. If you choose to access your money somewhere besides a bank, direct deposit is not available to you. If you don’t have a checking account, consider one of the fee-free options below.

Check out this guide to help you open a checking account if you don’t already have one.

Additionally, here are some of the best checking account options available right now.

Final word on direct deposits

Direct deposit is a great way to get paid conveniently and securely. The process to get started is quick and easy and is offered by almost every employer. You’ll receive your paychecks faster than you would via the traditional paper method.

Moreover, by dividing your paycheck into multiple savings accounts, you even may be able to grow your money over the long term and save up to reach your financial goals.

Andrew Latham

Andrew is the Content Director for SuperMoney, a Certified Financial Planner®, and a Certified Personal Finance Counselor. He loves to geek out on financial data and translate it into actionable insights everyone can understand. His work is often cited by major publications and institutions, such as Forbes, U.S. News, Fox Business, SFGate, Realtor, Deloitte, and Business Insider.

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