How to Set Up Direct Deposit
5 Min Read | Published: May 8, 2024
This article contains general information and is not intended to provide information that is specific to American Express products and services. Similar products and services offered by different companies will have different features and you should always read about product details before acquiring any financial product.
With direct deposit, payment can be sent electronically straight into your bank account. See how easy it is to set up direct deposit in our step-by-step guide.
At-A-Glance
- Direct deposit allows your paychecks to be deposited directly into your account automatically.
- The benefits of direct deposit include convenience, security, and easy money management.
- Setting up direct deposit is typically a straightforward process.
Gone are the days when employees would have to deposit their paychecks. Today, many people are paid via direct deposit. With direct deposit, you can receive payments directly into your bank account. You don’t have to wait for a physical check to arrive so you can deposit it at the bank. Direct deposit offers a convenient way to streamline your financial transactions.
In this article, we’ll go over how you can set up direct deposit, along with the benefits of doing so.
5 Steps to Set Up Direct Deposit
Fortunately, it’s a breeze to set up direct deposit. Here’s a close look at what the simple, five-step process typically entails:1
| Step 1 | Obtain a direct deposit form from your employer |
| Step 2 | Fill in your bank account information |
| Step 3 | Confirm the deposit amount |
| Step 4 | Include a voided check or deposit slip with your form |
| Step 5 | Submit your direct deposit form to your employer |
- Obtain a direct deposit form from your employer
First, ask your employer for a direct deposit form. This way you can provide them with all of the information they’ll need to deposit your paychecks into your bank account. - Fill in your bank account information
Then, add your bank account details to the direct deposit form. You’ll need to include the account type (checking or savings), account number, routing number, bank name, and bank address. - Confirm the deposit amount
Next, determine how much money you’d like deposited into your account. You may want your entire paycheck or net income to go into your checking account. Or perhaps you prefer it to be split between your checking and your savings account. - Include a voided check or deposit slip with your form
If required, take a check that’s associated with the account you’d like to use for direct deposit and write the word “VOID” across it in black or blue permanent ink. Instead of a voided check, you may be able to include a direct deposit slip that states the date, your name, your account number, and the amounts that will be deposited. - Submit your direct deposit form to your employer
Lastly, double-check all of the information you provided to make sure it’s accurate. Then, give it to your employer and find out when your first direct deposit will arrive.
Benefits of Direct Deposit
There are a number of noteworthy benefits of direct deposit, including:
- Convenience
With direct deposit, you don’t have to wait for paper checks and spend your time depositing them with your smartphone or at a brick-and-mortar bank. All you have to do is log into your bank account and look for the funds. - Security
Unfortunately, a physical check can get lost, stolen, or forgotten. The good news is that direct deposit eliminates all these risks and in turn, offers security and peace of mind. - Easy financial management
Every direct deposit that enters your bank account will be recorded electronically. This makes it easier to manage your finances since you won’t have to keep manual records of how much you earned. The predictability of direct deposit can help you to budget more easily as well. - Environmental friendliness
Unlike paper checks, which involve paper, envelopes, and sometimes, gas for transportation to the bank, direct deposit is better for the environment.
Did you know? Some banks offer early direct deposit, which means you could be able to receive your paycheck a few days early.2
Frequently Asked Questions
It depends on your bank. However, most banks deposit funds at midnight. If payday falls on a weekend, you may see it into your account the preceding Friday.3
It may be difficult to make a direct deposit into someone else’s account. They will need to share their account and routing numbers with you. In many cases, it makes more sense to make an online transfer, do a wire transfer, or use a peer-to-peer online transfer.4
Whether or not direct deposit is required depends on your employer and the state you live in. A few states may allow employers to mandate it. In some cases, it may also depend on the classification of employees, and whether they are public sector or private.5
The Takeaway
Direct deposit occurs when your employer or another payer issues an electronic payment that is automatically and securely deposited into your bank account. It’s a faster and more efficient alternative to physical checks.
1,2,3,4 “Your Complete Guide To Direct Deposit,” Forbes Advisor
5 “Can Employers Make Direct Deposit Mandatory?,” Paycor
Anna Baluch is a personal finance writer from Cleveland, OH. She enjoys helping people from all walks of life make smart financial decisions. Her work can be seen on Credit Karma, Forbes, LendingTree, Insurify, and many other publications. Connect with Anna on LinkedIn.
All Credit Intel content is written by freelance authors and commissioned and paid for by American Express.
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