And that’s why we will be discussing Direct Deposits in full in this article.
A Direct Deposit in its simple terms is the payment of money directly into someone’s account. Direct Deposits are automated as the funds are sent electronically to the payee’s account.
Direct Deposits are used in business, to pay workers’ salaries, bills, taxes, and any kind of payment. The deposits are so easy as you don’t need a physical check or the presence of the other party and it is even better for employers as they get their paycheck without lifting a finger and almost 94% of workers in the United States receive their paycheck through this.
How Do Direct Deposits Work?
For the Payer to make a successful direct deposit, he must have the details of the payee like account details including bank number and routing number. Once he has these details, he can make a direct deposit with ease.
Employers who use direct deposit as their mode of paying their employees have fixed dates for paying. On those days, they only need to forward the details of their workers to the bank and the bank will complete the payment by depositing the designated amount to the workers’ accounts. The workers then receive credit alerts to signify they have received their paychecks.
Direct deposits do not only work in offices as literally anybody can make direct deposits.
Setting up a direct deposit is the same across borders regardless of the payer. To set up a direct deposit,
Fill Out The Form: This form will contain the payee’s details like name, bank or credit account, routing number, address, Social Security number, signature, and any other required information. Amount To Be Deposited: Fill out the required space on the form, the amount to be sent to the other party just as in a check. The receiver has the option of receiving the full amount in his account or splitting it and sending some to his savings account. Add A Voided Check: To ensure the payer is connecting to your correct bank account, the receiver is often required to attach a deposit slip of a voided check. Hand In The Form: Well, that’s pretty much what to do with forms only that you must be security conscious when submitting your direct deposit form because of the sensitive information on it. You can submit it remotely via a secure browser refer than email to ensure top security.
The form will be forwarded to the bank and the receiver’s account will be credited accordingly.
There are so many advantages to using direct deposits instead of checks and other payment options. Some of such advantages include:
Faster Access To Funds: With direct deposit, payments like paychecks are received faster and on time. Safe Transactions: While using checks, a lot of issues like missing slips or stolen checks can occur but are not so with direct deposits. The money is deposited ‘directly’ to the payee’s account without security hitches. More Saving Options: You can choose to split your paycheck and have a percentage of it with the direct deposit payment option. Fewer Fees: Direct Deposits waive unwanted bank fees away for you unlike checking accounts that require monthly charges on the account.
Direct Deposit is inarguably the most popular payment option among employees, business settings, and regular day-to-day transactions. They are not too complex to understand and have been explained in detail in this article.
Are Direct Deposits Only For Paychecks?
They are not limited to sending and receiving paychecks even though that’s just one of the uses. You can use direct deposit to send money across to anybody and not just your employees.
Direct Deposits are also used for receiving social security benefits, child support, paying bills, getting tax refunds, and more. The uses are limitless given that it involves the transfer of money.
Do Direct Deposits Take Time To Get To The Receiver?
Not at all. If there is any unique advantage of using direct deposits over other payment methods like the check, it is the fact that it saves time and will not need you to go down to the bank each time you get paid.
Is Direct Deposit Better Than Check?
Checks can get lost or stolen causing security problems but direct deposits have little or no hitches as they are wited automatically to the payee’s account. With Direct Deposits too, the process becomes easier and ride the world a lot of paper waste.
