What are the benefits of using direct deposit?
Direct deposit is a method for receiving funds through an electronic payment into your credit union or bank account. There are numerous advantages of direct deposit. First, it saves you time because you won’t have to make a trip to your credit union or bank to deposit a paper check. The money you receive through direct deposit is immediately available for withdrawal, unlike paper checks that require a "hold" allowing time for the funds to clear and become available to you.
According to the Internal Revenue Service, direct deposit is the fastest way to get your tax refund, and you can use it to deposit your refund into one, two, or even three accounts. Eight out of 10 taxpayers get their refunds by using direct deposit. It is simple, safe and secure. This is the same electronic transfer system used to deposit nearly 98% of all Social Security and Veterans Affairs benefits into millions of accounts.
The best way to start using direct deposit is to open a checking account.
At Credit Union of Southern California (CU SoCal), we make opening a checking account easy!
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What is direct deposit and how does it work?
Direct deposit is a way to receive money owed to you by having the funds directly deposited into your checking or savings account. Direct deposit is one of the advantages of having a checking account. Funds that can be direct deposited into a bank account include payroll, Social Security benefits, child support payments, and income tax refunds sent by the IRS.
One of main benefits of direct deposit for employees is, you get paid sooner. Funds are available in your account immediately (unlike with depositing a traditional check meaning the funds need time to clear).
You can set up direct deposit with your employer or a government agency from which you receive payments, simply by providing your credit union or bank account number, bank routing number, Social Security number, and other personal information.
When you set up direct deposit of payments owed to you, you won’t receive a paper check for that payment because the funds will be electronically deposited by the payer into the account(s) you specify.
Advantages of using direct deposit
There are numerous advantages to having direct deposit, including:
Quicker access to funds. Once your credit union or bank receives the funds, the money is available in your account immediately, unlike with depositing a traditional check which requires time for the funds to clear.
Time saver. Save time and save money on gasoline by reducing trips to the bank to deposit your paychecks.
Security. Direct deposit is 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.
Better record-keeping. Direct deposits are a form of electronic payments, which creates a traceable record of all your incoming payments. Direct deposits you receive will be indicated on your account statement as an "ACH" payment from the company or agency that paid you, which improves record-keeping.
Automatic bill payments. Most people set up direct deposit of pay to go into their checking account. Knowing that your payments will be regularly and reliably deposited means you can set up automatic bill pay of utility bills, loan payments, credit card payments, and more.
Special benefits and perks. Many credit unions and banks offer high-yield checking accounts and
rewards checking accounts that pay a higher dividend on account balances when you sign up to receive direct deposits or any electronic deposit into your account.
What are the disadvantages of direct deposit?
While there are many benefits to using direct deposit, one of the disadvantages is related to cybersecurity. Financial institutions and companies and agencies that issue direct deposit payments must continually be monitoring the security of their electronic payment processing systems and protecting their customers personal information to prevent hackers from accessing information and funds.
Is direct deposit better than a paycheck?
Paper checks can get misplaced in your home, lost in the mail, or lost on your way to the bank. Because direct deposit is a paperless, electronic form of payment, this provides a key advantage over paychecks that can be misplaced.
What time does direct deposit go through?
Direct deposit typically goes through before 9 a.m. on the day you're scheduled to be paid.
How does direct deposit compare to a wire transfer?
A direct deposit is a type of electronic funds transfer (EFT) that is typically processed through an automated clearing house (ACH), while wire transfers are sent directly between one credit union or bank and another.
Why is my direct deposit late?
A direct deposit may be late if your payday happens to fall on the weekend or on one of the 11 federal holidays recognized by the United States Government.
Why do employees prefer direct deposit?
One of the main benefits of direct deposit for employees is they can get paid sooner. If your employer offers direct deposit, your pay will be processed and sent for electronic payment. Once your bank receives the funds, the funds are available in your account immediately.
Should I enroll in direct deposit?
Whether you enroll should be based on your personal financial needs and preferences. However, direct deposit does offer its advantages, including quicker payment deposited directly into your account.
How do I set up direct deposit?
Setting up direct deposit is easy. Typically, you'll need to have already opened a checking or savings account, or other financial account into which the money will be deposited. Start by completing a direct deposit form with your employer or the agency that is paying you. On the form you will designate an amount to be deposited into your account and whether you want to split the funds so that money goes to two accounts (for example, your checking and savings accounts). 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 routing number. Direct deposit typically takes around one to three business days to set up. If you are
setting up direct deposit with an employer, the amount of time it takes may depend on the type of payroll software your employer uses.
Why Savvy Consumers Choose CU SoCal
For over 60 years CU SoCal has been providing financial services, including HELOCs, car loans, personal loans, mortgages, credit cards, and other banking products, to those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County.
Please give us a call today at 866.287.6225 today to schedule a no-obligation consultation with one of our HELOC experts.
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