If you’re still getting paper paychecks, there are many benefits to having your paystubs automatically deposited into your bank account. In fact, 93% of employees have already enrolled in direct deposit because it makes their life simpler and their finances more streamlined. If you haven’t signed up yet, direct deposit is a way to electronically transfer money from one bank to another without having to receive a paper check, take the check to a bank or ATM, and wait for the money to clear. Direct deposit money moves between banks via a high-speed network called the Automated Clearing House, or ACH.
Most banks, including Fifth Third, offer direct deposit services for their checking account customers. Many employers prefer direct deposit because it saves them the time of issuing physical checks. But direct deposit isn’t just for paychecks. You can use it to receive Social Security checks, pensions, tax refunds, travel reimbursements, and many other types of payments. Gig workers can use direct deposit, too.
1. It’s Immediate
When you use direct deposit, the money shows up in your account on payday, ready for you to use.
2. It’s Convenient
With direct deposit, trips to the bank are a thing of the past, saving you valuable time. Even better, you don’t need to be at work to collect a paper check. If you were sick or on vacation on payday, you’d have to wait until you returned to work to get paid or ask someone to mail you the check, potentially incurring yet another delay. With direct deposit, you get paid no matter where you are.
3. It’s Safe and Secure
Despite how careful you are, there’s always the risk of losing, misplacing, or damaging a paper check and needing to wait until your employer stops payment and issues you a new check. Even worse, your paycheck could be stolen and cashed. While checks require a signature, it’s no guarantee against someone else cashing it if a bank teller or check-cashing employee doesn’t verify the identity of the person cashing the check. It would take time and effort to prove the theft before you would be able to get paid again.
4. It’s Easy to Set Up
Digital banking is here to stay, and direct deposit definitely falls within this super convenient way of banking. Typically, employers will ask you to fill out a form to set up direct deposit. You will have to provide your name, address, Social Security number, bank routing number, and account number. The bank routing number is the first set of numbers printed on the bottom left of your checks. Your account number is to the right on the bottom of the check.
5. It Helps You Budget
Since your money is always deposited in your bank account on time, you never have to stress about having the funds available to pay your bills and expenses. You can even schedule your rent, gas bill, mobile device bill, or other payments to be deducted immediately after your paycheck hits your checking account. This supports your budget and avoids late fees, helping you reach your financial goals faster.
6. It Helps You Save Money
You can have your paycheck split into more than one account instead of going entirely into your checking account. For example, a portion can go into an emergency savings account, a down payment savings account, or a travel account. You don’t have to remember to transfer the money over, automatically putting into practice the old savings rule: Pay yourself first.
7. It’s Good for the Environment
You can shrink your carbon footprint by going paperless. Direct deposit eliminates paper waste for printing checks and the fuel needed to mail them, not to mention the gas used driving to the bank. With speed, security, and convenience, it’s easy to see why direct deposit has become such a popular way for people to get paid. It only takes a few minutes to set up to start reaping the benefits of direct deposit.
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