Direct deposit is by far the most common way to get paid in America. In fact, 93% of U.S. employees are paid by direct deposit, according to the American Payroll Association’s “Getting Paid in America” Survey.
Direct deposit transmits your paycheck from your employer’s business account directly into your checking or savings accounts. You still get a pay stub or an electronic equivalent from your employer that lists the amount of the transfer along with any deductions, like taxes, health care or retirement.
If you’re among the 7% of workers still getting paid via paper checks, here are a few reasons why you may want to switch to direct deposit.
You Get Paid Faster With Direct Deposit
If you get paid by check, your money isn’t always available to you immediately. Instead, you may have to wait a couple of days after depositing the check to actually have access to that money. Why? Your financial institution needs to make sure the funds are available at your employer’s bank before clearing your check. The process is even slower if you get your checks by mail. And just think: you can run into yet more delays if you deposit your check right before a holiday weekend.
With direct deposit, however, funds clear instantly, giving you immediate access to your hard-earned cash. Better yet, if your normal payday happens to be over a holiday weekend, you’ll typically get your paycheck on the last working day before the weekend.
Paper Checks Are Inconvenient
With direct deposit, you don’t have to wait to get your check in the mail or stand in line at your financial intuition to deposit it. When you get direct deposit, your cash is in your bank account immediately.
Paper checks can indeed be inconvenient. Not only this but you can also run into problems trying to cash the check. For example, if your financial institution is not the same as your company’s bank, verification could take a couple of days – meaning you’ll need to wait to access your own money.
You Can’t Lose Direct Deposit
Because direct deposit happens electronically, the chances of losing your paycheck are slim, especially if you’ve provided the correct bank account information to your employer.
In contrast, it’s possible to lose paper checks or have them stolen. In fact, check fraud is still the most prevalent form of payments fraud, check fraud accounted for 47% of industry losses, $1.3 billion, according to the American Bankers Association’s 2020 Deposit Account Fraud Survey. The jump was so drastic that it actually overtook debit card fraud (44% at $1.2 billion) to claim the number one spot for fraud against deposit accounts.
If you do lose your paycheck, you’ll have to go through your employer to get a new one. Unfortunately, this process can take days, and things can get complicated if someone found the check and cashed it.
You Can Avoid Monthly Maintenance Fees
Many financial institutions still charge monthly fees on checking accounts. And some require that you receive a certain number of direct deposits a month to waive fees. For example, in order to waive certain fees, you may need to receive direct deposits totaling $500 or have at least one direct deposit per month in any amount. This is true for our E-Plus, Rewards and Dividend Checking accounts, Click Here for more information on checking account fees and benefits.
If you do bank at a financial institution with fees like this, being paid via direct deposit often allows you to meet these monthly requirements. This means you won’t get dinged with these specific fees and you’ll save money.
You Can Automatically Divert Payments To Savings
Some employers allow you to set up direct deposit with multiple accounts. By doing this, you can automatically deposit cash into your savings account without lifting a finger.
If your employer doesn’t allow multiple-account direct deposits, you can set up automatic transfers to your Patriot savings instead.
Automate Your Paychecks To Simplify Your Finances
Here’s the bottom line: if you don’t currently have direct deposit, sign up for it if possible. At the end of the day, direct deposit is more convenient than dealing with paper checks and it gives you greater control over your hard-earned cash.
Paperless payroll saves trees, it saves time and it saves frustration. It does all of this while being safer, faster and more secure. If you’re unsure about your direct deposit options, stop by or call Patriot today. Our helpful representatives can get you the information you need to set up direct deposit and can even help you organize your deposits to meet your financial goals.