Direct Deposit

What Do I Need to Know About Direct Deposit?

This guide will help you understand your rights when using direct deposit. It includes a list of questions commonly asked by consumers who, like you, are considering signing up for direct deposit. The answers to these questions are meant to explain many of the benefits direct deposit offers, along with the responsibilities of the participating organizations and banks. Below is a list of terms used frequently throughout this guide.

Account - Refers to the bank account into which your money is directly deposited (usually a checking or savings account).

Bank - Refers to any financial institution, including a credit union, thrift, and savings and loan association.

Payor - Refers to any organization depositing money into your account, such as an employer or government agency.

Questions and Answers

What type of payments can be made by direct deposit?

Direct deposit can be used for any ongoing, regularly scheduled payment, including:

Some organizations are also using direct deposit to deliver occasional payments, such as tax refunds, business travel advances and tuition reimbursements.

How do I begin using direct deposit?

Ask your payor if they offer direct deposit. If they do, simply tell them you want to sign up for the service, and they will provide you with what you need to get started. If they don't offer direct deposit, tell them why you would like the service and encourage them to offer it.

How is my money deposited into my account?

The payor's bank will electronically instruct your bank to credit your account for the amount owed to you on the predetermined date. Your bank then deposits this money into your account and charges the payor's bank account. You do not need to have an account at the same bank as your employer or paying company.

When can I access the money deposited into my account?

Your money will be available for you the morning of the payment date. In most cases, your money is deposited even before your bank opens for business! This is quicker than if you deposit a check with a teller, in which case you might not have access to your funds until the next day or later.

How can I be sure my deposit was made?

Normally the payor will give you a payment stub or notice that lets you know it sent the deposit to your account. If the payor does not do so, your bank will either notify you within two days after it receives the deposit or it will provide you a telephone number you can use to check the status of your deposits. The deposit will also be shown on your monthly bank statement from your bank. Remember, always keep the stub from the payor for your records.

What if there is a discrepancy between my bank account statement and the deposit notice I received from the payor?

Notify your bank and payor immediately. You have up to 60 days from your account statement date to notify your bank in person, by telephone or in writing of an unauthorized deposit or incorrect deposit amount. (If you notify your bank in person or by telephone, you may also be required to provide a written confirmation within 10 business days.) If the bank needs more than 10 business days to investigate and resolve your situation, it must credit the amount in question to your account during the investigation.

Do I need a bank account to use direct deposit?

Yes. A bank account is necessary for you to receive deposit payments.

Can I stop using direct deposit if I change my mind?

Yes. If you decide you no longer want to use direct deposit, just contact your payor. They will tell you how to cancel the service. Most organizations will ask you to put your request in writing. However, the Federal Government will not allow you to cancel if you are receiving regular federal payments.

With direct deposit, can the payor take money out of my account or obtain confidential information about me through my bank?

No! Only you can approve the withdrawal of money from your account. Your company or any other organization sending you payments by direct deposit, including the government, cannot obtain your account balance or any other personal information. They only have access to the information you provided them when you began direct deposit. Actually, receiving your money by direct deposit is more confidential than being paid by check because fewer people are involved in the delivery and deposit of your payment.