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How do you set up direct deposit

Setting up direct deposit is a relatively straight forward process. Direct deposit setup starts with opening a checking account or savings account at a credit union, bank, or other financial institution. If you already have an account, the next steps are easy. The information needed for setting up direct deposit includes your account number and the bank's routing number.
 
Read on to learn more about how to set up direct deposit.
 
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What is direct deposit?

Direct deposit is a banking method that lets people receive payments from others by having the money directly deposited into your checking or savings account.
 
Some of the most common uses of direct deposit include Payroll, Social Security payments, child support, and tax refunds from the Internal Revenue Service (IRS).

Information needed to set up direct deposit

Regardless of how direct deposit is set up (in-person or online), the same information is required to make it happen. This includes your:
 
Mailing addresses. For both you and your bank.
 
Bank routing number. The routing number can be found on a personal check connected to your account, or on the financial institution's website. The routing number is the first set of numbers (nine digits) on the lower left corner of a physical check.
 
Account number. Select the account into which you want the money deposited. Some payments may be split and deposited into different accounts, such as your checking, savings, or 401(k) retirement account. The account number is the next set of numbers after the routing number.
 
Social security number. To verify your identity.

Setting up direct deposit step-by-step

Direct deposit setup can be achieved in a few ways. Depending on the payment source you may be provided with a form to complete, or you may be directed to sign-up online. Direct deposit a tax refund may be initiated on your tax return which you submit to the IRS.
 
In this example we'll look at how to set up direct deposit with an employer, so your paycheck is deposited directly into the account of your choice.
 
1. Obtain a direct deposit form from your employer. Complete a direct deposit form either on paper or online.
 
2. Fill in your account information. Provide the account number of the account where you want the money deposited. You will also be asked to provide the routing number for your credit union or bank where the account is held.
 
3. Decide deposit amount. The amount you choose to direct deposit may depend on the amount you’re receiving and the frequency of the payment. Some people choose to split their pay into a checking account and into savings or a 401(k)-retirement account. When setting up direct deposit, you will have the opportunity to specify the amounts you want deposited into your accounts, as a percentage or dollar amount of your total earnings for each pay period.
 
4. Attach a voided check or deposit slip. You may be asked to provide a voided check from your checking account into which the money will be deposited, or a deposit slip showing your credit union or bank account number and routing number.
 
5. Submit the form. Credit unions and banks provide consumers with in-person and online form submission options, but providing the form in person provides added security and assurance. Your employer will let you know how they need the information.

How to check direct deposit status:

1. If you have online banking, simply log into your account to see if the money has been deposited.
2. You may also call or visit the financial institution where you have your account and speak to a representative. You may ask that the funds owed to you be traced.
3. If your pay from an employer is delayed, contact your employer directly.
4. If you receive direct deposit from a U.S. government agency, for Social Security or unemployment benefits, call the agency directly.

What else can direct deposit be used for?

Direct deposit is a popular account service, due to its convenience and security. Here are more details about
 
Social security benefits. The Social Security Administration makes it easy to receive your benefit by direct deposit. Direct deposit setup can be done at your bank or credit union, or you can call Social Security for assistance. Your benefit will go automatically into your account every month.
 
Independent contractors. If you are an independent contractor or freelance, you probably get paid by a mailed check. Some clients may be willing to add you to their payroll direct deposit system. Receiving pay vi direct deposit is quicker than waiting for a check to arrive.
 
Child support. Typically, court-mandated child support can be received by signing up for direct deposit through your state.
 
Tax refunds. The Internal Revenue Service (IRS) lets taxpayers use direct deposit to deposit your tax refund into one, two, or even three accounts. Even if you don't have a checking account, there are other options available for direct deposit. Direct deposit is now also available for returns filed after their due date. You can choose direct deposit setup by informing your tax preparer or selecting that refund option when you prepare your own taxes.
 
Paying bills. If your credit union or bank offers a bill-pay option, you can schedule automatic electronic payments to pay your monthly bills such as cable and utilities.

What time does direct deposit hit?

The main benefit of direct deposit is that you get paid sooner. Funds are available in your account immediately (unlike with depositing a traditional check which requires time for the funds to clear).
 
Funds that are directly deposited into a bank account typically go through before 9 a.m. but can arrive as early as midnight. The variability in the amount of time it can take is largely due to the payer’s timeframe to release funds. All banks have a process for receiving and disbursing direct deposit funds to the account holder.

How long does direct deposit take to set up?

Setting up direct deposit could take anywhere from a few days to a few weeks, depending on whether you sign-up online or in-person, as well as the payer's processing time. Once your forms are submitted and the account links are set up, there’s no need to do anything else. Most employers offer a direct deposit service, as do government agencies including the IRS and Social Security.

Why hasn't my direct deposit gone through?

The variability in the amount of time it can take for direct deposit to go through is largely due to the payer’s timeframe to release funds. All banks have a process for receiving and disbursing direct deposit funds to account holders. If your payday falls on a weekend or Federal Holiday, your payment could be delayed. Other reasons for a delay could be related to the electronic transfer system by either the payer or your bank. A tax return payment is somewhat unpredictable and is based on the processing time of your file.

Is setting up direct deposit worth it?

Yes. Setting up direct deposit saves time driving to a credit union or bank, saves gas, provides you with faster access to your money, and eliminates the risk of misplacing your checks along the way.

Pros

• Saves money. You save money on gasoline and the payer saves money on check printing and mailing costs.
• Faster transactions. Your money is automatically deposited, saving you a trip to the bank.
• Get paid sooner. Funds are available in your account immediately (unlike with depositing a traditional check meaning the funds need time to clear).
• Safer than receiving a paper check. Paper checks can get misplaced in your home, lost in the mail, or lost on your way to the bank.
• Security risks. All electronic financial transactions these days have some level of cyber security risk, which all financial institutions take measures to prevent.
• More paperwork when changing banks. If you change to a different credit union or bank, you’ll need to give the payer instructions to stop your direct deposit. If you want to continue direct depositing at a new financial institution, you’ll need to submit a new application form with your new account and routing number.

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