How to Enjoy the Benefits of Direct Deposit | St. Mary's Credit Union
07/20/2020
By: St. Mary's CU
The vast majority of employees in the United States are paid via direct deposit – and for good reason. Not only is it free to set up, but it's also far more convenient, efficient, and secure than other payment options. Here, St. Mary's Credit Union in Massachusetts explores the benefits of direct deposit that are available to employers and employees, as well as how to set up your account.
What Is Direct Deposit?
Since its invention in 1975, nearly the entire country has preferred direct deposit to other forms of payment. An innovative system, it allows employers to pay their employees electronically, placing paychecks and salaries straight into the checking or savings account of each employee. This eliminates the need for paper checks, the inconvenience of depositing checks, and waiting for funds to be fully available in an account.
Benefits for Employers
A popular option among the majority of companies, employers can enjoy a wide array of benefits by making direct deposit available for employees. By offering direct deposit, business owners can:
Save time and money on payroll operating costs.
Reduce the risk of check fraud.
Have more control over payroll and payroll expenses.
Simplify bookkeeping by eliminating time delays.
Gain access to online transaction reports whenever needed.
Use less paper for a better environmental impact.
More often than not, these benefits can be enjoyed free of cost. Even if the employer isn't using custom software, most banks won't charge to set up direct deposit accounts.
Benefits for Workers
Electronic payments aren't only well-liked among employers. While employees are usually given the option to decline using direct deposit, most don't for the following reasons:
Having immediate access to paycheck money
Reducing the risk of lost or stolen paychecks
Spending less time cashing checks at the ATM or bank
Controlling where the money goes between several accounts
Getting paid without hassle – even when away from the office
Just like employers, employees can also enjoy direct deposit without cost. In fact, they may even end up spending less. St. Mary's offers free checking account services to people who are paid by direct deposit.
Setting Up Direct Deposit
If you're an employee, start by asking your employer for a direct deposit form. If yours doesn't have one, you can pick a form up at your bank. Simply fill it out with the following information and return to your employer with a voided check:
Account and routing information
Account type
Name of the account holder
Name of financial institution
Social security number
How to split your payment between your accounts
If you're an employer offering direct deposit for the first time, you'll need to work with a bank, credit union, or payroll provider that offers Automatic Clearing House (ACH) payments. Once you've set up an account with the institution of your choice, collect the above information from participating employees to ensure payment goes to the right place. Include any disclosures required by local and federal laws, and if you're unsure about regulations, check with your accountant.
Set Up Direct Deposit Today
Whether you're an employer or an employee, you can enjoy the many direct deposit benefits every time it's payday. If you'd like to find out more, contact St. Mary's Credit Union. Based in MA, we serve members from all walks of life with checking and savings accounts, direct deposit, financial education, and other resources.
