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By Casey Mysliwy
MoneyMix Contributor

Payday is great—but finding time to deposit your paycheck? Not so great. Fortunately, there's a convenient, secure solution that can help you save time and gain access to your funds more quickly. Say hello to direct deposit.

there's a better way

Direct deposit is the electronic transfer of a payment from a company or organization into your checking or savings account. And it's not just for paychecks: You also can use it for tax refunds, bonuses, financial aid checks, and more.

Your credit union easily can help you set up direct deposit.

Here are a few reasons to consider making the switch to direct deposit:

  • Convenience. According to NACHA, The Electronic Payments Association, Herndon, Va., you can save three work days a year by not spending time depositing checks in person. And don't worry about not knowing when or how much money has been deposited. You'll receive an electronic or hard-copy earnings statement each payday, showing the net deposit, tax withholdings, company savings plans, and other withheld amounts.

  • Security. The Treasury Department receives about 1.4 million inquiries each year about problems with paper checks, including forgeries or delays due to weather or other unforeseen events. Direct deposit eliminates that risk and assures safety with no loss of convenience.

  • Confidentiality. Using paper checks increases your risk of check fraud or identity theft, while using direct deposit presents few problems. With direct deposit, your check passes through fewer hands, which protects your financial information. Direct deposit also uses the same levels of security that companies and the government use to transfer funds to each other.

  • Timeliness. When you're paid by check, there's often a delay before you can deposit it. But with direct deposit, your money is consistently deposited on time, even if you're not at work on payday. It's also a big help to people who work different shifts and have trouble depositing checks during business hours. Direct deposit also assures that funds are available to cover recurring bill payments you have set up, saving you from overdraft fees.

  • Accessibility. Direct deposited funds clear automatically. You can write checks and use your debit card without having to worry that your funds haven't been credited.

  • Earnings. With direct deposit, your check earns dividends as soon as possible if it is deposited into an interest-bearing account. Making the deposit in person can cause delays, which postpones your money's ability to make money.

but wait, there's more!

Direct deposit also can help you save more. According to the results of a NACHA survey, people who use direct deposit save $390 a month, $90 more than those saving manually. Why the difference? It's easier to save when you pay yourself first.

Pairing direct deposit with automated transfers from checking to savings can help you make real savings progress. In a survey conducted by the Consumer Federation of America, Washington, D.C., 75% of respondents ranked automatic transfers from checking to savings or investments as an important savings strategy; 48% ranked automatic transfers as very important.

satisfaction guaranteed

Combine direct deposit and automatic transfers for a powerful pair of money-management tools. For example, let's say you automatically put a portion of your paycheck into savings and have the balance deposited to your checking account. You also could make a loan payment to the credit union, automatically.

 Learn more about electronic payments

 Find out how to receive federal benefits directly.

By doing so, you're accomplishing three things at once, at no loss of your time:

  1. You build your savings.
  2. You fulfill a debt obligation, building a solid credit history with timely payments.
  3. You make funds available immediately to pay other bills and to use for fun.

get set up

It's simple to switch to direct deposit: Your credit union easily can help you set it up. Ask the staff at your credit union for its nine-digit routing and transit number before you request direct deposit from anyone issuing checks to you regularly. Next, fill out an authorization form from your employer, or other check issuer, to have your funds deposited directly into your account.

It really is that painless. So start saving yourself some time and contact your credit union about making the move to direct deposit today.

Published July 25, 2012

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