Direct deposit is a convenient and quick way to receive income like your paycheck, government benefit or monthly pension. It usually takes around one to two days after it’s issued to arrive in your bank account.
Additionally, direct deposit is also a safer and more efficient way to send and receive money since it goes straight to your bank account, reducing the amount of time and people needed to process the transaction. Keep reading to learn more about direct deposit and how long it takes.
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How Does Direct Deposit Work?
Direct deposit allows an employer or other entity to electronically transfer funds from their account to yours. The money is sent via the Automated Clearing House (ACH) network, which moves money between banks to save you the hassle of waiting for a check in the mail or having to go to the bank to deposit it.
It is also convenient for employers because they can process payroll much faster without having to deal with issuing, signing and mailing checks. In addition to getting your paycheck deposited straight into your bank account, direct deposit is also used for:
- Child support payments
- Federal and government benefits
- Investment-related dividends
- Retirement pension
- Social Security
- Tax refunds
How Long Does Direct Deposit Take?
The amount of time that direct deposit takes to get to your bank account depends on the entity issuing the funds. For instance, if your employer uses payroll software to process your paycheck and send the transfer, they’ll set a pay date which is when you can expect to see the funds in your bank account.
Between one and four days before your pay date, the payroll software will remind your employer to process and submit the direct deposit. Once the payment is submitted, the funds are transferred to your account on the pay date.
Is Direct Deposit Instant?
Although it is quick, you won’t be able to access your fund immediately. Usually, you can withdraw the funds the same day they were received, but sometimes you might not be able to access it until the next business day.
Advantages of Direct Deposit
Taking advantage of direct deposit can make your life a lot simpler. For one, you won’t have to worry about waiting for a check or finding time to make a deposit at the bank. In addition, here are some other advantages of direct deposit:
- The funds might be available sooner than if you deposited a check.
- Many banks let you split your direct deposit between more than one bank account so you can automatically grow your savings.
- Your bank might waive your account maintenance fee if you receive regular direct deposits.
- You don’t have to worry about check fraud or identity theft from a lost or stolen check.
- You won’t lose or misplace the funds as if they were cash.
- Employers save time and money on processing payroll and mailing checks.
How Do You Set Up Direct Deposit?
- Request a direct deposit form. You can ask your employer for a form or download one directly from your bank. Usually, the form already includes the routing number and other details you’ll need.
- Fill in the form. You will need this basic information might on the form:
- Name
- Bank routing number (9 digits)
- Account number
- Social Security number (not all banks ask for this)
Additionally, banks might ask you to attach a voided blank check that confirms the information you provided. If you bank with a large national bank, be sure the routing number you use corresponds to your local branch. Some banks have different routing numbers for different states and types of transactions. You can find the routing number on your personal checks, bank statements, bank website or by contacting your bank.
- Sign, date and submit the form to your employer. When you’ve completed the form, sign and date it and then submit it to your employer or direct deposit issuer. It is recommended that you keep a copy of the authorization form and follow up with your employer to confirm they have set it up.
Author’s Verdict
Direct deposit has many advantages, such as being safe, convenient, quick, and many other benefits. After reading this post, we hope that you are informed about direct deposit and how long it takes to receive it.
In addition, we have a list of bank promotions to get some extra cash in your pockets today. You may also want to check out savings accounts if you want to get started on saving up money.
