How to Set Up Direct Deposit
Posted by Krystal Gullo on December 4th, 2019
When sending or receiving payments, you have several options. You can use cash, checks, or electronic payments, and most organizations prefer that you use direct deposit. In fact, sometimes you’re required to use direct deposit.
Fortunately, it’s a safe and inexpensive payment option for all involved parties.
What is Direct Deposit?
Direct deposit is a free electronic transfer service that sends your paychecks or benefit checks to a bank account or prepaid debit card of your choosing.
Having Chase or Bank of America direct deposit, among other banks’, can also help you avoid monthly checking account fees.
Reasons to Make the Switch
There are several reasons for both businesses and consumers to use direct deposit including:
Setting up Direct Deposit to Receive Payments
To receive payments electronically, you need to provide bank account information to the organization that is paying you. They may require that you use a particular form (such as a direct deposit form) or you may be able to just provide a voided check. In some cases, you'll need to provide your account information online.
1. Get a direct deposit form from your employer
Ask for a written or online direct deposit form. If that isn’t available, ask your bank or credit union for one. We’ve included a list of forms from top banks, including the Capital One and Bank of America direct deposit forms.
If you receive Social Security or other federal benefits, it’s legally required to get them through direct deposit or a Direct Express prepaid debit card. To sign up, visit GoDirect.gov or call (800) 333-1795.
2. Fill in account information
You typically need to provide the following personal and bank details:
3. Confirm the deposit amount
You can choose to deposit 100% of the check into a checking account, but there’s a benefit to splitting direct deposit into two or more accounts. If you can put a portion, such as 20%, of your paycheck or benefit check into a high-yield savings account, you can save automatically each month. (To find savings accounts with the highest rates, see our list of the best online savings accounts.)
4. Attach a voided check or deposit slip, if required
Some employers use a voided check or deposit ticket to verify the account and routing numbers. If you’re asked to do this, write “VOID” across the front of a blank check, which ensures the check’s unusable if it’s lost or stolen. Then attach the check or slip to the direct deposit form.
5. Submit the form
Give the form to your employer, and wait for the direct deposit to go into effect. It may take weeks, so monitor your bank account regularly.
Direct deposit is a convenient service that can give you faster and safer access to your hard-earned money than a check. You’ll need to take some time to set up the automatic deposit. But you’ll save time later by eliminating trips to a bank to cash checks — or waiting for checks to clear.
Consumers Can Use the Same Technology
Now that you know how easy it is to receive payments electronically, you might want to start sending payments the same way. As a consumer, you can use the same technology to avoid using checks, paying for postage, and getting bills into the mail on time.
To do that you can either set up online bill payment with your bank or set up ACH payments with whoever you need to pay.
It’s always a good idea to check your bank accounts periodically to find errors and signs of identity theft before starting the process.
Also, as you start sending and receiving electronic payments, it’s wise to review your bank accounts more frequently—at least until you figure out how everything works.
If you’re switching from a paper-based check register, you'll have to adjust to the change of seeing everything online, but there's no reason you can't continue to balance your accounts as you’ve done in the past
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About the AuthorKrystal Gullo
Joined: November 24th, 2019
Articles Posted: 3
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