Direct Deposit: How it Works and How to Set Up

Whenever you have the option, choose to set up direct deposit of your paycheck and benefits. It’s more convenient, secure, and saves you time and money.

What is Direct Deposit?

Direct Deposit is a fast, simple, and secure way to get your paycheck, tax refund or social security benefits. Direct deposit electronically places your paycheck, pension, Social Security, or other regular monthly income into a checking, savings account or money market account. There is typically no charge for direct deposit, funds are available on payday (some financial institutions make them available the night before) and many financial institutions require a direct deposit to avoid account maintenance fees.

Why choose direct deposit?

There are several reasons why direct deposit makes sense. For starters, having your deposits automated is convenient, simple, and secure. There’s no need to run to the bank or use the mobile app to deposit a check. In fact, your pay is available on payday without needing to wait for the paycheck to clear. With direct deposit, you can be on vacation and still get your payments on time. And it reduces the chance of misplacing a check and having to wait for a replacement.

How to set up direct deposit

Setting up direct deposit is simple. You’ll need to share information with the organization that pays you. Typically, it can take a few days, a few weeks or after a few pay periods to get your first payment through direct deposit. Once direct deposit is set up, your pay is available immediately on payday.

With your paycheck

To set up payments, you’ll need to provide your account information and financial institution’s routing number to the organization that is paying you. You might be required to complete a direct deposit form, provide a voided check or enter the information through an online payroll system.

To set up direct deposit, the organizer will need the following:

1. Name of account holder listed on the account
2. Account number (of savings or checking account)
3. Routing number
4. Bank name and address (a local branch address may be fine)

This information can be found on a personal check or by logging into your account online or mobile app. Be mindful of whom you share your account number with as its sensitive information.

With tax refunds

When completing your taxes, provide your direct deposit information to your tax preparer or enter it in the tax preparation software used. Generally, you’ll receive your tax refund faster with a direct deposit than waiting for a paper check.

With Social Security Benefits

The Social Security Administration sends benefit payments electronically. You’ll need to provide your direct deposit information directly to SSA.

Direct Deposit Tips for Success

1. Stay on top of your direct deposits. It’s best to set deposit alerts with your financial institution whenever money hits your account.
2. Review your deposit amounts. Check to ensure you’re paid the right amount. Verify your hours worked, deductions, and contributions noted on your paystub.
3. Update your accounts. Make sure your direct deposit hits the right account. Before closing an account that receives the direct deposit, make the switch then verify the deposit is made to the new account first.

Set Up Direct Deposit FAQ

How do I set up direct deposit without a bank account?

You’ll need a checking account or savings account. Open an account with a bank, credit union, or another financial institution that offers deposit-taking accounts. Once you have an account, provide your account number and the financial institutions routing number to your employer or benefits provider.

Do I need to complete a form to set up a direct deposit?

Completing a direct deposit form may be necessary. Ask your employer or benefits provider on what forms are necessary. Submitting a paper form or using an online request may be necessary.

Can I set up direct deposits into multiple accounts?

It depends on the organization that pays you. Many employers allow you to split your direct deposits into multiple accounts within the same financial institution. For instance, you can set 80% of your paycheck deposited into checking and 20% deposited into savings. Some employers allow you to make deposits into different financial institutions. For instance, you can set 50% of your pay to Bank 1 and 50% to Credit Union A. In some instances, you can set dollar amounts as opposed to percentages.

What time does direct deposit hit my account?

Direct deposit of payments typically arrives early morning on payday. Sometimes, deposits may reach your account the night before payday. With other payments, the direct deposit may arrive into your account a few days after it was sent.