Are you looking for a safe and convenient way to deposit your paycheck? You may want to consider setting up direct deposit. Direct deposit is a convenient way to receive payments directly into your checking or savings account without the hassle of paper checks.
While direct deposit is the most common way to receive payment, there are a few things you should know about it – from how it works to the benefits and drawbacks of using this method.
What exactly is direct deposit?
Direct deposit is an electronic transfer of funds from one bank account to another. This type of payment method eliminates the need for paper checks and physical deposits at banks or credit unions. Instead, money is transferred electronically between two accounts with no manual intervention required.
Once set up, your payments will go directly into your account on the designated payment date.
Overall, direct deposit can be a convenient and secure payment method, but it’s important to weigh the pros and cons before deciding if it’s right for you.
Pros of direct deposit
Convenience: Direct deposit eliminates the need to physically deposit your paychecks, saving time and effort. Access funds immediately on payday, without having to wait for a physical check to clear.
Security: Direct deposit is a secure payment method that reduces the risk of ID theft or mail fraud through paper tracks.
Reliability: Direct deposit is a reliable way to get paid. You can be confident that the money will be in your account on payday, even if you’re out of town or unable to get to the bank.
Extra perks: Some banks offer extra perks for adding direct deposit to your account. These benefits can include a higher annual percentage yield (APY) or a cash sign-up bonus.
Healthy Habits: Split and save your direct deposit to create healthy saving habits.
Cons of direct deposit
Privacy: You likely will be required to share sensitive personal information, such as bank account details, with your employer to enroll in direct deposit.
Account requirements: Some banks may require a minimum balance or charge fees for direct deposit.
Lack of control: You may not have as much control over your paycheck, as you cannot physically hold or deposit them yourself. If your employer makes a mistake with your direct deposit, it can take a few days to sort out the problem and get your money.
Extra steps: If you switch banks, close your account, or change employers, you must go through the entire sign-up process again, including the waiting period.
How to set up direct deposit
Like everything, direct deposit has its pros and cons. If you think direct deposit would be a good fit for you, here are the steps to take to get setup.
Set up direct deposit by asking your employer for a physical or electronic direct deposit form to fill out. The form typically asks for information like:
- Your name
- Your address
- Your bank’s name
- Your bank’s address
- Your bank’s routing number
- Your bank account number
- The percentage of your paycheck you’d like to have deposited in each bank account
When you submit a paper form, you may need to sign and date the bottom and attach a voided check. Submit the form to your employer’s human resources or designated department.
The waiting period for your direct deposit to start can vary depending on your employer’s payroll provider. Some may take a few days, ensuring your next paycheck goes directly into your bank account and others can take a few weeks, meaning you may have to process at least one more paper check before your direct deposit starts.
ValleyStar’s direct deposit offer
At ValleyStar Credit Union, we know convenience and immediate access to funds are key. Whether you’re an existing member or opening a new account, we have some great checking account and direct deposit offers to get you started.
Current checking account members will now receive 1% APY on checking accounts if a monthly average balance of $500 a month is kept (up to $10,000). Enrollment in direct deposit is not required for current members to receive this offer.
New checking accounts enrolled in direct deposit will automatically receive 1% APY if a monthly average balance between $500-$1,000 is maintained (up to $10,000). After 3 months, ValleyStar will deposit $250 into your checking accounts, if:
- Direct deposit is set up within 3 months of opening your checking account
- Three months of consistent direct deposits are made of no less than $1,000/month
To open a new checking account, visit valleystar.org/personal/save-spend/checking/.
Determine if direct deposit is right for you
Direct deposit may be right for you if you’re looking for funds to be safely deposited automatically, saving you time, while avoiding disruptions in accessing your money. We advise you to weigh all the pros and cons outlined above to determine if direct deposit is the right choice. If it is, contact your employer today to get set up and reach out to us to take advantage of our current direct deposit offerings.
