Direct deposits cut out the paycheck's middleman. Instead of receiving a physical check and depositing it into the account yourself, you can set up a direct deposit with your employer so your pay transfers directly to your designated account on payday. While setting direct deposit up is simple enough, there are documents you will need beforehand.
Direct Deposit Overview
According to Policy Genius, direct deposit is often used in employment situations on payday. However, it has many applications outside of employment, such as tax refunds, Social Security benefits and unemployment benefits. It has also been used to make payments under the condition that the other party accepts electronic funds transfers. Many people choose to pay their rent, utility, mortgage and insurance payments via direct deposit.
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Some banks even offer bonuses for those who open a new account with direct deposit, such as a one-time cash deposit or higher interest rates if directly deposited to a savings account. You can set up a direct deposit at work as long as you have a bank account to deposit into and your employer has direct deposit abilities – which most do these days.
Filling Out a Direct Deposit Form
The first step in setting up direct deposit at work is to get the direct deposit form from your employer, either as a physical or electronic copy. While most employers can easily supply you with the form, some might not have it on hand. In this case, some banks and credit unions, like Wells Fargo, have a form that you can download or complete online.
Once you have obtained the form, you will need the following information to fill it out: your bank's mailing address, the bank's routing number, your account number and the type of account you will be depositing to. Some forms might ask for your Social Security number or mailing address. You should be able to find your bank's mailing address either online or on a bank statement. If you received the form from the bank and not your employer, you will most likely need to supply the employer's address as well.
You should be able to find the bank's routing number – also known as the American Bankers Association (ABA) number – on a bank statement or at the bottom of your checks. Your account number follows the bank's routing number on the bottom of the check. Lastly, determine the type of account you wish to deposit to. This could be either your checking or savings account. You will most likely need to note this on the paperwork.
Setting Up Direct Deposit
Once you fill out the form with the necessary information, determine how much of your paycheck you wish to have deposited into your account at the end of each pay period. Whether you want to put 100 percent of the amount into one account or split it up is up to you. For example, 20 percent could go into your savings and the rest into checking.
Before you submit the form to your employer, include a voided check or deposit ticket. This is so your employer and bank can easily verify account and routing numbers. You can void a check by writing VOID in big letters across the face of the check. This will protect you from fraud if it goes missing. Attach the voided check to the form. Now, you're ready to submit the form to your employer – however, it may take a few weeks for it to go into effect.