What is Direct Deposit? How is it different from a regular deposit or a check?
Direct deposit is the deposit of money, directly from the bank account of the payer into the bank account of the recipient. It is done electronically, instead of through a physical check. Some instances where direct deposit is commonly used are pay checks and income tax refunds.
How can you set up a Direct Deposit?
It’s quite easy – you just have to fill up a simple form for the payer, and provide details like your checking or savings account number, the routing number, etc. Many payers allow you to do this online, making the process even simpler!
How long does direct deposit take?
Once you fill the form to set up a direct deposit, it takes a couple of weeks for it to be effective. For example, direct deposit for your pay checks may take 1-2 pay cycles to start. However, once direct deposit is set up, each deposit is instantaneously available to you, because there is no clearing of the check involved.
What are the Pros and cons of Direct Deposit?
There are many advantages of using direct deposit. You don’t have to visit the bank branch, there is no risk of the check being lost or stolen, funds are available in your account much quicker, and more. The biggest con of direct deposit, just like with any form of electronic banking, is the risk of a cyber attack or hacking.
How much does Direct Deposit cost?
That’s the best part – it is totally free to you! You can set up a direct deposit without incurring any fee from your bank.