If you’re like most people, getting paid is the last thing on your mind when you’re off the clock. You just want to go home, relax after a long day at work, and maybe unwind with a nice meal or two. But if you don’t get paid promptly, that’s going to be a problem. That’s why you need to learn about direct deposits: what they are and how they can help you get paid early.
What is a direct deposit?
Direct deposit is a payment method where an employer or other payer electronically deposits funds into your account at a financial institution. The funds are transferred electronically, typically on a recurring basis. The funds can be deposited directly into your checking or savings account.
According to the experts at SoFi, “Direct deposits are most commonly used by companies to pay employees; however, they can also be used as one form of government benefit payment to you, such as Social Security benefits or tax refunds.”
How does direct deposit work?
You can use direct deposit to get paid by your employer, or you can get paid by the government electronically.
In addition to these two common uses of direct deposit, there are other ways it can be used. For example, you could also use it to pay a bill or make an online payment. The most common way that people use direct deposit is as a way of getting money into their bank accounts quickly and easily.
There are a few things you should be aware of, however. First, if you haven’t set up your direct deposit properly and have not provided all the correct information to your employer or vendor, there’s no guarantee that they can process your payment as a direct deposit.
Second, it’s important to note that if someone else has access to your account—for instance, if they’re in control of it or they have power of attorney over it—they could possibly withdraw funds without your permission.
Which businesses can offer you direct deposit?
You can receive your paycheck by direct deposit from:
- Banks, credit unions and other financial institutions. If your employer uses a bank to hold its payroll funds, it may offer you the option of receiving your payments electronically.
- Government agencies. If you work for a government agency or receive government benefits such as Social Security or unemployment compensation, you may be able to choose to have them sent electronically.
- Many businesses now offer their employees the option of having their paychecks made available through direct deposit so they can access their money immediately without waiting days for it to arrive via check in the mail.
- Retail stores (such as Walmart). The retailer’s website offers several payment options, including EDD (Electronic Funds Debit), which allows customers to access cash immediately after purchasing an item at the checkout by using a debit card or checking account information linked to their store loyalty card (and provided by Walmart).
There are many benefits to using direct deposit. It’s easy to set up, it’s convenient, and it eliminates the need for you to worry about getting your paycheck at work when you should be enjoying your time off. Even with all these benefits, though, some people may still have questions about how direct deposit works or if there is any risk involved with using this method of getting paid by your employer instead of leaving a check inside an envelope at their office building lobby.