Direct deposit is one of many ways that you can get paid for your work, or other goods and services. Through this method of payment, you receive funds directly to your bank account rather than getting a paper check that you must cash.
Most people find that it is more convenient to receive funds electronically. In fact, you may even be required to use this method at certain workplaces.
Before you can get started with direct deposit, you must have a financial account to send the funds to. Most commonly, this is a checking account with a bank or credit union. There are many types of free checking accounts that you can choose from if you do not already have one.
It is helpful to compare different types of accounts before opening one, as the terms and fees may vary depending on the financial institution. Once you have opened an account, all you need to get started is a direct deposit form, which can be obtained from your financial institution or employer.
What is direct deposit?
Direct deposit is so widely used today that you will more than likely need to sign up for this payment method at some point in your life. Whether you have a job, receive benefits from the government or sell items online, chances are you will need to receive your payments through direct deposit either now or in the future.
For example, if you receive benefits from the Department of Veterans Affairs (VA), Social Security or any other government branch, federal law requires that you switch to direct deposit if you are still getting paper checks.
While many people associate this payment method with getting a paycheck, you can also use it to make payments to other people or entities. For example, if you are paying your rent or other bills electronically using your bank account number, you are technically using a direct deposit form to transfer the funds.
The main benefit of submitting a direct deposit authorization form to your employer or any other entity is that you can get paid more quickly. This payment method allows you to use your funds as soon as they are available and removes the hassle of having to cash a paper check at your bank or through a check cashing service. If you use online banking, you can also see your funds appear automatically the moment they are available in your account.
Another benefit of using a direct deposit form is that this payment method is much more secure than receiving cash or even a paper check as payment. When you send or receive funds electronically, you do not need to worry about a paper check getting damaged, or worse, lost altogether.
How to Set Up Direct Deposit Through Your Employer
If you have recently gotten a job that uses this payment method, you will more than likely need to fill out a form the first day that you come in for work. In most cases, the employer will provide the direct deposit authorization form that you need to use. If not, you can learn more about obtaining the proper form directly from your bank in the next section.
Your form may be printed on company letterhead or the letterhead of whichever service the employer uses for its payroll services. For example, many workplaces utilize Automatic Data Processing (ADP) for their payroll needs, which may mean that you have to fill out ADP direct deposit paperwork to get started.
Paychex direct deposit is another popular payroll service for employers. Regardless of where your form comes from, it will require that you fill in the same basic information, including:
- The mailing address of your financial institution, which can be found on your bank or credit union’s website.
- Your bank’s routing number, which is a unique nine-digit number assigned to each bank by the American Banking Association (ABA). If your form asks for an ABA number, it is the same as a routing number.
- Your individual account number, which is found after the routing number on your check. Make sure you exclude the check number, which is usually the four digits that follow your account number.
- The type of account you have, which will either be a checking or savings account.
Once you have filled out your form for direct deposit, you can usually decide whether you want all of your paycheck to go into the same account, or get split into more than one account. For example, you may wish to deposit a certain percentage of your paycheck directly to a savings account.
Finally, a direct deposit form may require that you attach a voided check before submitting the document to your employer. To complete this step, all you need to do is take a check out of your checkbook and write “VOID” across its face in large letters. This makes your check unusable by anyone else.
How to Set Up Direct Deposit Through Your Bank
If your employer does not have a direct deposit form available, you can usually still request your electronic payments by submitting a form obtained from your bank instead. The process of setting up payments through your bank is very similar to enrolling in this service with your employer.
The main difference is that you will need to obtain a specific form from your own bank, rather than using a generic one provided by your employer. For example, Chase direct deposit paperwork is different than the paperwork needed for Wells Fargo direct deposit, even if the forms contain similar information.
In order to find a Chase direct deposit form or paperwork for any other bank, start by going onto your financial institution’s website, or simply searching for the form you need online. Most major banks make it incredibly easy to locate the paperwork you need online, but if not, you can always ask for a Bank of America direct deposit form or any other bank’s form by visiting the financial institution in person.
The process of filling out a direct deposit authorization form from any bank is similar to signing up for electronic payments through your workplace. One important difference is that you must include your employer’s address, rather than your bank’s address.
Furthermore, if you are signing up for Bank of America direct deposit or want to get electronic payments with any other bank, you may find that certain information, such as the bank’s routing number, is auto-filled. This may make the process slightly easier.
In order to complete the direct deposit process, you must submit your completed form to your employer so that your information can be put on file. Once your form is received, your workplace’s payroll department will take care of the rest, and you can begin receiving payments electronically as soon as your form is processed.