When it comes to direct deposit, employers can electronically deposit a payroll check into an employee's bank account. This all but eliminates the need for paper checks and visits to the bank to deposit those paper checks. In the U.S. direct deposit has become very popular with many agencies and employers because it reduces the amount of time they have to spend on preparing and handing out paper checks. For some agencies, such as the Social Security Administration, where millions of checks need to be processed each month, these savings can be dramatic.
In addition to the SSA, other government agencies that use direct deposit regularly include the Veteran's Administration, state unemployment services, the Internal Revenue Service, and a whole host of other agencies.
This type of electronic transfer has many advantages. One of the most important and useful to consumers is that direct deposits will usually post faster than paper checks that are deposited by hand. This allows consumers quicker access to their money.
Another advantage that many consumers find useful, especially the elderly, is that direct deposit does not require traveling to the bank. Those who do not drive or who live a good distance from their bank find this feature especially nice.
Most consumers who use direct deposit can also have their deposit divided up so that some goes into their checking account while other portions go into savings accounts or money market accounts. For those individuals who often forget to do this or do not have the discipline to do this on their own, this can be a very good way to get money into savings' accounts on a regular basis.
In order to set up a direct deposit you will need to do a few things. You will certainly need to visit the bank and ask them for their guidelines on EFT set up. While most of the process is similar between all banks and credit unions there may be some unique features that your bank uses that you may need to know about. You will also need to visit with your employer's accounting or HR department to set up your direct deposit account. When you visit with the accounting people have a check with you as they will need to know your account number and routing number.
If you wish to set up a direct deposit with a government agency the best advice is to call the agency and get their requirements straight from them. In most cases, you will see that this is easy to do, and most of this can be handled over the phone.
Direct deposit is popular in the U.S. for a reason and that reason is it works. With today's technology advances electronic funds transfers are safe and fast and they can save you a lot of time. They are easy to set up and they can provide your money to you faster than traditional methods of using paper checks.
For companies and businesses with employees, direct deposit is an easy way to save your company time and money, while making your employees happy. Direct deposit is an electronic payment made directly to the checking or savings account of your employees, retirees, or shareholders. No matter what size your company, direct deposit offers some really useful benefits.
Using direct deposit your company will enjoy time and dollar savings. Your account reconciliation process becomes easier and your company will have a single dollar amount for the total Direct Deposit transaction. Compare this to hundreds or even thousands of individual check amounts to reconcile. Even if you're only writing 20 payroll checks a week this means over 1,000 transactions to reconcile every year and that amount of work takes time and cost labor dollars.
Using direct deposit eliminates manual labor and mailing mistakes or wrong and incorrect addressing errors or slip ups by the mail delivery. Because, direct deposits don't get lost or stolen like printed checks, the potential for errors is reduced. The data is only entered once and then the system saves the information and payday becomes a seamless and accurate process for paying every employee on time at the same.
Direct deposit is an incentive that attracts employees. Because the benefits of direct deposit are so evident, most employers aim to achieve 100% direct deposit in their company so all employees get paid through the same efficient method, but there are special cases.
If some of your employees are without a bank account, it is highly unlikely that they will be enthused about your 100% direct deposit campaign. So, how can you provide them with a viable and attractive solution, so they will be eager to participate in the company direct deposit system? The answer is to provide them with a prepaid, MasterCard or Visa debit card.
These Pre-paid, Bank issued cards are FDIC insured and carry all of the same benefits as Every other Mastercard or Visa debit card but, they have one unique advantage. They will offer accounts to employees reported to Chexsystems, some 80% (and growing Daily) of banks will no longer do.
For the employee who can't open a bank account and is preventing you from attaining 100% direct deposit payroll, a prepaid debit card can be the final link ending the manual nightmare of hand issuing paychecks. Plus, the card is a big advantage to the employee as well.
Employees who don't have or, can't get a bank account are forced to cash their check at check cashing stores. These stores take 2% to 10% of your employees paycheck every week. That's a big bite! And, the employee is forced to drive all over town, just to pay utility bills because; they can't drop a check in the mail or use a debit card to pay their bills online or by phone like everybody else.
Estimates show the average employee earning $500 a week loses over $108.25 a month ($1,299.00 a year) just cashing their check at check cashing companies. A prepaid debit card issued to them would make any employer seem like a hero in their eyes, saving them time and money not to mention bringing them all the privileges a bank account can offer.
It's hard to imagine how much an employee can struggle when they can't get cash at ATMs, and they're paying 2%-10% of their earnings to cash their check. Employees in this situation are forced to pay all their bills with money orders which cost fifty-cents or more each. By the time they buy the money order and the 37 cent stamp they've added almost a dollar to every bill they pay.
Prepaid debit cards are a great solution for the employee while helping your company transition smoothly to a 100% direct deposit payroll system. In the process saving your company labor dollars and helping you add to your bottom line by recovering hours spent accounting for thousands even millions of pay checks every year.
Both Peter Kenny & Sam P. Killsting are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Peter Kenny has sinced written about articles on various topics from Credit Cards, Finances and Best Money Market. Peter Kenny is a writer for The Thrifty Scot, please visit us at and. Peter Kenny's top article generates over 368000 views. to your Favourites.
Sam P. Killsting has sinced written about articles on various topics from Fitness, Personal Finance and Finances. S. Proctor Killsting is a financial coach specalizing in no cost ways to increase wealth. If you're on chexsystems... this FDIC insured Bank offers