What is Direct Deposit?
Direct deposit is the electronic transfer of a payment from a company or organization into an individual’s checking or savings account. It is the most widely used ACH electronic payment application and it is a smart way to get paid. It is ideal for more than just payroll, including payments, tax refunds, pensions, dividends, and bonuses.
Setting up Direct Deposit
Establishing direct deposit of your paycheck requires you to go through your employer, who will have the paperwork needed to set it up. Your employer will want your Social Security number and a voided check from your checkbook containing your bank’s routing number (a number assigned by the Federal Reserve to identify your bank) and your account number. The routing number is the first set of numbers on the bottom left of your check. The routing number is followed by your account number and the number of the check itself. If you prefer to have the direct deposit into your savings account, your employer will need your bank’s routing number and your savings account number.
It usually takes about two weeks for direct deposit to be established. After it does, instead of your regular paycheck, you will receive a voucher that looks similar to a check from your employer stating how much was deposited to your account and all the same information on taxes, benefits, and other deductions that were on your paper paycheck.