For most employees, direct deposit will hit their accounts on payday and will allow employees to access those funds by 9 a.m. that day. However, some financial institutions even allow users to access their direct deposits a couple of days early.
When you deposit a paper check, it’s hard to know when the money will be available for withdrawal. It could be anywhere from a day or two to several days. This can make it tricky when you need the funds right away to pay your bills or handle other expenses.
And while receiving a paycheck by direct deposit used to be a novelty or a perk, now it’s the norm for most employees. According to a survey by the American Payroll Association, 93% of employees got paid by direct deposit in 2022.
But what time does direct deposit hit your bank account? And when will these funds actually be available? Read on to learn more about the ins and outs of direct deposits, how long it takes to receive the funds, and what to do if you don’t have a bank account.
What is direct deposit?
A direct deposit is simply an electronic funds transfer (EFT) that allows financial institutions to send and receive money electronically without physical checks. The money is sent through the Automated Clearing House (ACH) network, which facilitates the transactions. Workers can choose to have the money deposited directly in a savings or checking account or onto a prepaid debit card.
The mode of electronically transferring money is safe and secure because account numbers and other sensitive data are encrypted. Payroll checks as direct deposits are one of the most common uses of the ACH network, but government agencies have adopted the direct deposit system as well for most transactions.
What time does direct deposit hit your bank account?
A direct deposit can take two to three business days to go through, but you can sometimes get it earlier. In any event, when workers receive their paycheck by direct deposit, it should be deposited and available for use by 9 a.m. on your exact payday. However, in some cases, it could come in as soon as midnight.
You may even get paid early depending on your financial institution. Some banks or credit unions have a feature where you can get your direct deposit money up to two days earlier than your actual payday. This can be especially convenient for those who might need access to their money a little sooner than usual.
That said, this timeframe can vary depending on your firm’s payroll software and other factors. For example, you won’t get a direct deposit on weekends, federal holidays, or any time the Federal Reserve banking services are closed. In that case, you should get the money on the business day prior to the holiday or on the next business day.
If you consistently need access to your direct deposit funds early, you may want to open a checking account with such features. Take a look at some of the checking accounts below to get started.
How does direct deposit work?
The process of your employer sending checks by direct deposit is simple. It can take a couple of days, which is why most employers submit the information a few days earlier than your actual payday.
- Your employer sends the payroll data to its banking partner.
- That financial institution submits it to the ACH network.
- The ACH network processes and verifies the data and sends it to your institution.
- Your institution drops the money into your account where it’s immediately available for withdrawal.
Benefits of direct deposit
There are several benefits to receiving direct deposits as opposed to paper checks. This might explain why so many employers and government agencies almost exclusively use direct deposit instead.
A paper check can easily get lost, stolen, or damaged, but with direct deposit, none of that is a concern. Plus, your account details are encrypted in electronic transfers, meaning your information is safe from hackers.
Quick access to cash
When you deposit a paper check, it can take a few days for the money to clear and become available for cash withdrawals. Once a direct deposit comes in though, the money is available on the same day, so there’s no waiting period to make use of your funds.
“Ask your employer about its policies. Generally, if you receive your pay through direct deposit, your funds will be available to withdraw at least as soon as if you had deposited a paper check, and often sooner,” says the Consumer Financial Protection Bureau (CFPB).
Both employers and employees have the benefit of reduced costs when using direct deposit. Employees don’t have to worry about check-cashing fees or charges for bounced checks, and other fees might be waived for people who take advantage of direct deposits.
“Direct deposit may also enable you to avoid monthly maintenance fees on a checking account without maintaining a minimum monthly balance,” adds CFPB.
Employers who offer direct deposit can save time and money on printing, postage, envelopes, and the time it takes to write and/or sign all those checks.
With direct deposit, there’s no longer a need for employees to pick up their checks and take them to the bank to deposit them. Plus, employers benefit from a more streamlined payroll process when no physical paychecks are involved.
Easier to save money
Employees who get direct deposit paychecks can opt to have a portion of their paycheck deposited into their savings account as well as their checking account. It can be easier to save money when you never actually see those funds.
One of the best ways to do this is with a savings account that uses automatic transfers, such as those below.
How to set up direct deposit
If you want to set up direct deposit, or your company requires it, you’ll be given a direct deposit form to fill out. This will include your name, address, bank name, and, most importantly, your account number and routing number. The account number and routing number are kind of like your street address — it tells the electronic system where to send your money. You may also need to present a voided check or deposit slip for verification.
As part of the direct deposit process, you can also decide where the payer sends the money. For example, many consumers choose to have a portion of their hard-earned money deposited into a separate account from checking. This is a smart way to build your emergency fund or save money for other financial goals.
Can you get direct deposit without a bank account?
Even if you don’t have a checking or savings account, you may still be able to get direct deposit payments if your employer offers pay cards. Pay cards are reloadable prepaid debit cards that employers can use to send you electronic payments. Instead of getting a direct deposit to your bank account, your paycheck will be directly deposited onto your pay card on payday.
The card works just like a regular debit card, allowing you to make purchases or withdraw cash from an ATM. This option has a lot of the same benefits as traditional direct deposits, meaning your money is secure, you have quick access to your cash, and you avoid any check cashing fees. However, keep in mind that you may have to pay fees for ATM transactions.
If you’re looking to avoid as many fees as possible, consider using one of the prepaid debit cards below, none of which charge ATM fees.
Can you get direct deposit funds with an online bank account?
You don’t have to have a brick-and-mortar bank to get the benefits of direct deposit. For example, you could get a Chime checking account or similar type of online account like Cash App. You can sign up for Chime direct deposit through the Chime mobile app using your account number and routing number and the process is much the same as with traditional financial institutions.
It should be noted that Chime is a financial technology company, much like Cash App, both of which are financial platforms rather than banks or credit unions. However, the mobile apps have banking partners who issue debit cards and have similar features to traditional banks, including FDIC insurance.
Will my direct deposit go through on the weekend?
While direct deposits or other electronic transfers can be initiated at any time, they will not be deposited on weekends or federal and bank holidays. If your normal payday falls on one of these days, employers will typically change the direct deposit time to the business day that falls just before the weekend or holiday.
In some cases, though, your direct deposit may not process deposits until the next business day following the weekend or federal and bank holidays.
Why hasn’t my direct deposit hit yet?
Although you should expect to receive direct deposits on your actual payday, this may not always happen. As mentioned, if your payday falls on a weekend or banking holiday, it could be delayed. If that isn’t the case, it could be that your benefits provider or employer’s information is somehow incorrect, there is a temporary delay in some part of the electronic transfer process, or the sender has missed the cutoff time, so payroll is delayed.
If you haven’t seen your direct deposit hit your bank account on the date it’s supposed to, you should contact your bank or your employer to let them know you haven’t received your direct deposit yet. As we all know, technology isn’t perfect, and it may just be a simple matter to clear up.
- You should receive your direct deposit in your bank account by 9 a.m. on your payday, or within two to three days for some other transactions.
- When direct deposits are scheduled, a feature offered by some institutions will release the funds to your bank account up to two days early.
- Be careful who you accept direct deposits from because you do have to provide sensitive bank account information.
- Some employers offer pay cards — prepaid debit cards — for workers without bank accounts. These cards can also accept direct deposit checks.
- Even if you don’t have an account with a traditional bank, you can get direct deposits through mobile apps such as a Chime account, Cash App, or others.
View Article Sources
- The ABCs of ACH — Nacha.org
- Automated Clearing House — U.S. Department of the Treasury
- Should I enroll in direct deposit? — Consumer Financial Protection Bureau
- Can I Write a Check to Myself? — SuperMoney
- How To Deposit a Paper Check on Cash App – Complete Guide — SuperMoney
- Checking Account Fees (2023) How To Avoid Them — SuperMoney
- Can You Cash a Ripped Check? — SuperMoney
- Third-Party Check: What It Is and Where To Cash It — SuperMoney
- Where Can I Cash a Check If I Don’t Have a Bank? — SuperMoney
- How To Cash a Cashier’s Check — SuperMoney
- How To Endorse or Sign a Check Over to Someone Else — SuperMoney
- What Is An eCheck And How To Send an eCheck? — SuperMoney
- Best Free Checking Accounts — SuperMoney
- Best Checking Accounts — SuperMoney