Understanding what direct deposit is, how it is set up and the many benefits can help you decide whether it is the right option for you.
What is direct deposit?
Direct deposit is money being transferred from one bank to another without the use of paper checks or cash. Employers offer this service or benefit to save their employees a trip to the bank to deposit paychecks. Federal agencies also utilize direct deposit for distributing benefits like social security or other programs.
The benefits of direct deposit are numerous:
- Speed. With direct deposit, your paycheck is deposited automatically into your designated account and accessible as soon as the bank “clears” it for use. You do not have to wait for the check to be physically given to you at work or mailed out. Time and money are saved as you are not required to visit your bank each pay cycle.
- Security. Funds go directly to your bank via an electronic transfer, there is no risk of losing a check or having it stolen.
- Savings. Paychecks can be automatically dispersed across multiple accounts. That means, in addition to the saving of time and gas to get to the bank, you can automatically have money transferred into a savings account to help you build a “rainy day fund” or save for the future.
How to get started
Direct deposit is often a free service provided by banks and credit unions. Implementing the service is simple and easy at Guaranty Bank. You will need to follow the following steps below to set up Direct Deposit to your Guaranty Bank account.
Step 1 — Download the Direct Deposit form to your computer. Note: You will need the Adobe Acrobat Reader installed to open the PDF file.
Step 2 — Fill in the form accurately with both your employer and bank information.
Step 3 — Print the form.
Step 4 — Submit the Direct Deposit form and a voided check to your employer’s payroll or accounting department.
Step 5 — Work with your employer to determine if you are eligible for direct deposits.
Step 6 — Once confirmed, check your account balance on payday by logging into mobile or online banking.
Now you are set to complete forms with your employer or federal agency that will be using direct deposit to put money into your account. Some employers or agencies require a voided check to be attached to the firm to help them verify the information has been correctly submitted.
Remember, you can designate the type of account (checking or savings), select the amount or a percentage to each account
What to look out for
There are few if any disadvantages of direct deposit. You can get paid faster, and funds are readily accessible without having to wait for the mail or go to the bank. But, while the process happens automatically, it’s still important to monitor that your pay stubs match the accounts and make sure deposits are being made regularly and in the right amount. With the ease of having your money deposited, it is easy to not pay close attention and to let errors slip by accident.
The process of transitioning to direct deposit may take just a few days or it may take a few check transactions to be finalized depending on your employer’s policies. Once this is setup you have a secure and convenient way of getting paid and accessing your money faster and easier than with a traditional paycheck deposit.