How to Set Up Direct Deposit?

A direct deposit allows you to send money from one bank account to another without having to pay your monthly account fees. With a direct deposit, you can easily send your paychecks to a prepaid debit card or a bank account. 

But how does it actually work? Continue reading to find out how to set up direct deposit at any bank or financial institution.

What Is a Direct Deposit?

A direct deposit allows you to electronically deposit money into any bank account or prepaid debit card. It is usually used to deposit a paycheck or benefits checks. However, you can also use it to deposit other payments. 

A direct deposit is faster than other methods and also makes it possible for banks to avoid using paper checks. To initiate a direct deposit, the sender’s bank submits a direct deposit request to the Automated Clearing House (ACH) network.

The ACH is responsible for handling all electronic money transfers among financial institutions. It processes and sends the direct deposit to the receiver’s bank. Once the amount has been sent, the same is deducted from the sender’s account and reflects in the receiver’s account.

Read on to find out how to set up direct deposit from your bank.

How to Set Up Direct Deposit?

To set up a direct deposit, you will need to follow these X steps:

Step 1: Get a Direct Deposit Form

To set up a direct deposit, you will need a direct deposit form. Ask your employer or your bank or credit union for an online or written direct deposit form. 

Step 2: Fill Out the Form

Next, start filling out the form with your personal and banking information. You are required to provide the following information:

1. Your bank’s mailing address, which can be found on your bank statement or the bank’s website.
2. Your bank’s nine-digit routing number, which is printed on your bank statement. 
3. Your account number, which is mentioned at the bottom of your check, right after the routing number. 
4. The type of your bank account, i.e. checking or savings account.
5. Your personal information, including your name, Social Security number, and your mailing. 

Step 3: Determine the Deposit Amount

With a direct deposit, you have the option to either send 100% of the amount into a checking account or split it between two or more accounts. Splitting it between two or more accounts can be beneficial as you can deposit some of the amount into a high-yield savings account and gain profit. 

Step 4: Submit a Voided Check

Many employers ask for a voided check to verify your account details before processing direct deposits. However, it cannot be used to make payments. If you are asked for a voided check, simply write “void” across a blank check and attach it to the direct deposit form.

Step 5: Submit the Direct Deposit Form

Once you have filled out the form and attached a voided check with it, make sure all the information is correct. Now submit it to your employer and wait for it to be processed. The processing time can take a couple of weeks.

Also learn about ACH payments and how they work.

Conclusion

A direct deposit is a safer, faster, and more convenient way to process your money, as compared to checks. It prevents your trips to the bank and also helps you save money by automatic direct deposits each month. Direct deposit can be made by filling out the deposit form and submitting it to your employer. Remember, it can take a few weeks for the deposit to be completed.