A direct deposit is a deposit into a bank account that doesn’t require a check to be written. Around 145 million Americans get paid through a direct deposit on a regular basis. Direct deposit is a perfectly acceptable form of getting a paycheck and is condoned by the IRS. There are also several government benefits that can also be paid out through direct deposit, like social security.
The biggest advantage to direct deposit is that it’s processed much faster than sending out a check and then depositing it. It’s also less hassle. With a direct deposit you don’t have to go to the bank, the deposit is taken care for you. This is particularly convenient if you don’t live near your bank. You can also get your direct deposit split between your checking account and savings, this way you know you’re saving money every month. One last perk that direct deposit has is that it doesn’t waste paper so it’s a very green form of payment.
To setup direct deposit your employer will typically have you fill out a direct deposit form with your bank information. They may also need a voided check, this is fairly standard. If you need to get a direct deposit from the federal government you’re going to have to arrange for it over the phone.
Online bill payments are also a form of direct deposit. In this case you’re depositing money into a company’s account instead of receiving it. You can use this to pay for your utilities, cable, internet, car payments, and many other common bills. If you have a tendency to forget to pay your bills on time, online bill pay is an excellent choice. Just make sure that your bank account is well funded at all times. You can call your companies to find out if they accept online bill payments.