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With direct deposit, you can get paid much faster than with a paper check. That’s why nearly all American workers use direct deposit from their employers.
More than 93% of U.S. workers receive their pay via direct deposit, according to the 2022 “Getting Paid in America” survey from the American Payroll Association. It’s a secure, convenient and quick way to get paid.
But how quick? In this article, we’ll go over what time direct deposit usually hits and when you can expect your paycheck to be deposited.
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- What is direct deposit?
- What time of day does direct deposit hit?
- Do direct deposits drop on Sundays?
- Benefits of using direct deposit
- Direct deposit without a bank account
- Next steps: Setting up your direct deposit
What is direct deposit?
Direct deposit (sometimes referred to as electronic funds transfer, or EFT) is an electronic way of sending and receiving payments. Money is deposited directly into the recipient’s bank account, rather than issuing a paper check. Recipients can choose to have money deposited into their checking or savings account.
Direct deposit payments are sent using the Automated Clearing House, or ACH, network. The money is sent electronically using encryption, keeping your bank account information safe.
Employers commonly use direct deposit to pay their employees, and government agencies often use direct deposit to send benefits and tax refunds.
What time of day does direct deposit hit?
Usually, you’ll have access to your direct deposit at the opening of business on your payday — by 9 a.m. In many cases, direct deposits hit accounts even earlier, often between midnight and 6 a.m. on payday morning.
But there are factors that can affect how long it takes your direct deposit to become available. That’s because there are several steps in the process of getting money from your company to your bank account.
- Your employer sends payroll information. First, your employer will send a payment file to its bank, listing all employees, their bank account information and the amount they’re to be paid.
- The ACH network processes the file. The employer’s bank then sends this information to an ACH Operator, typically either the Clearing House or the Federal Reserve, to work through the list and make sure all payments go to the correct places.
- Your bank receives payment. Next, your bank receives payment from the ACH network.
- Payment hits your account. Finally, your bank or credit union makes the money available in your account.
These steps can take a few days, but most companies start the process early so you’ll receive your money on payday. If a company doesn’t have the payroll information ready early enough, your money could be delayed.
While many people believe it takes three to five days for the ACH to process payments, the network moves quickly and can clear payments as soon as the same day.
Your bank also plays a role in when you get access to your pay. By law, banks must make direct deposits available by the next business day after the banking day the money is received from the ACH. But banks can choose to make the money available sooner than that — and many opt to give you access to your money right away.
Do direct deposits drop on Sundays?
Direct deposits don’t arrive on Sundays. That’s because the ACH network doesn’t settle payroll information on weekends or holidays when the Federal Reserve is closed. If your regular payday is scheduled to fall on a weekend, most employers will schedule payments to go out on the Friday before.
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Benefits of using direct deposit
Here are some of the advantages that come with using direct deposit.
- Safety — With direct deposit, you don’t have to worry about a paper check being lost or stolen. Direct deposit data is also encrypted, keeping your account information secure.
- Quick access to your money — In many cases, you’ll have access to your money even before 9 a.m. on payday.
- Convenience — Since your money goes straight into your bank account, you won’t have to pick up a check or run to the bank to deposit it. You can use the money right away.
- Low costs — With direct deposit, there are no check-cashing fees or other charges. Many banks even allow you to waive checking account monthly maintenance fees by using direct deposit.
- Savings options — When you set up your direct deposit, you can choose to split your payment — sending a certain percentage to your checking account and some to your savings account. This can make it easier to build up your savings.
Direct deposit without a bank account
You can usually take advantage of the benefits of direct deposit even if you don’t have a bank account. Many employers offer pay cards as an option for getting paid. These are reloadable prepaid debit cards that an employer can use to send electronic payments directly to you. Your money is deposited onto your pay card on payday.
Pay cards work much like a traditional debit card. You can typically use pay cards to access your money at an ATM and to make purchases. You also get many of the same benefits you would with direct deposit — your money is secure, payments arrive quickly and you can avoid check-cashing fees.
It’s important to note that sometimes pay cards come with fees, though these are relatively uncommon. You may also need to pay ATM fees to withdraw cash from your pay card — though often you’ll be allowed one free ATM withdrawal per pay period.
Next steps: Setting up your direct deposit
In most cases, you can set up direct deposit through your employer by contacting the company’s payroll department (if you weren’t already asked about it when you were hired).
If you have a bank account, the payroll department will typically give you a short form to fill out with your account information, including routing number and account number. You may also be asked to supply a blank, voided check.
As you set up direct deposit, think about where you want the money deposited. It may be simpler to send your entire paycheck to your checking account, but the option to send a percentage of your pay directly into a savings account could be a way to help you achieve some of your financial goals. Another option may be to send a portion of your money to an investment account, where it may grow at a faster pace than in your savings.
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About the author: Andrew Dunn is a veteran journalist with more than a decade of experience as a reporter and editor at North Carolina news organizations, including the Charlotte Observer and the StarNews in Wilmington. In those roles,… Read more.
As a seasoned financial expert with a deep understanding of electronic funds transfer systems, I can provide a comprehensive analysis of the information presented in the article about direct deposit and its intricacies. My expertise is grounded in years of practical experience and a keen interest in financial technologies and systems.
Firstly, the article rightly emphasizes the prevalence and efficiency of direct deposit, citing the 2022 “Getting Paid in America” survey from the American Payroll Association. The figure that more than 93% of U.S. workers receive their pay via direct deposit underscores its widespread adoption and acceptance.
The article breaks down the direct deposit process, explaining that it involves the use of the Automated Clearing House (ACH) network. The ACH network operates electronically, ensuring the secure transmission of funds directly into recipients' bank accounts. This aligns with the contemporary financial landscape, where electronic transactions have become the norm.
A key aspect covered is the timing of direct deposit availability. The article suggests that, typically, individuals can expect access to their funds at the start of the business day on payday, often as early as midnight to 6 a.m. This aligns with the common belief that direct deposits are processed swiftly, though the actual timeline involves multiple steps.
The article delves into the sequential process of direct deposit, involving the employer's submission of payroll information, ACH network processing, and the subsequent crediting of funds by the recipient's bank. It rightly points out that while there are several steps involved, companies often initiate the process early to ensure timely payments. This insight dispels the misconception that ACH transactions necessarily take three to five days, emphasizing the efficiency of the network.
Crucially, the article touches on the role of banks in expediting access to funds. By law, banks must make direct deposits available by the next business day after receiving funds from the ACH. However, many banks opt to provide immediate access, reinforcing the advantages of direct deposit in terms of quick and convenient access to funds.
Furthermore, the article addresses a common concern about direct deposits on Sundays, clarifying that they do not occur due to the ACH network's settlement schedule. Employers typically schedule payments to go out on the Friday before if a payday falls on a weekend.
The benefits of using direct deposit are highlighted, encompassing safety, quick access, convenience, low costs, and savings options. The safety aspect is particularly emphasized, emphasizing the encryption of direct deposit data, mitigating concerns about lost or stolen paper checks.
Finally, the article touches on the possibility of utilizing direct deposit without a bank account, mentioning pay cards as a viable option. It provides insights into how pay cards work, their benefits, and the potential fees associated with them.
In conclusion, this article serves as a valuable resource for individuals seeking a nuanced understanding of the direct deposit process, debunking myths, and providing practical insights into its benefits and functionality.
