What Are the Benefits of Direct Deposits?

Direct deposits are automatic transfers of electronic funds made to a recipient. Those funds are directly deposited into that person’s checking account, which they can use at their discretion.

Most employers conduct their payroll through direct deposits instead of paper checks. Many government benefits are transferred electronically to recipients. Even emergency online loans can utilize direct deposits to get applicants their funds.

Direct deposits are a very popular payment method. Read ahead to find out why.

The Benefits of Direct Deposits

Speed

One of the biggest benefits of the direct deposit method is speed. Direct deposits tend to give you faster access to your funds faster than other payment options.

For example, Social Security Benefits have been sent to recipients through direct deposits or prepaid debit cards since 2013. If the government issued Social Security Benefits via check, it could take up to six weeks for them to arrive at a recipient’s location. That’s a long wait.

Or say that you’re applying for a fast online loan to cover an emergency expense that you can’t otherwise afford. You don’t want to wait too long to access those funds — it is an emergency, after all. The advantage of looking into loans online with direct deposit is that they’re an option that can provide quick access to funds. If you’re approved for the loan, you could use the borrowed funds to resolve your expense in a short amount of time.

Convenience

If you had a paper check, you would have to travel to a local bank branch or nearby ATM to deposit it into your checking account. At the very least, you would have to go through the steps of using a mobile check deposit on a banking app. A direct deposit doesn’t require you to invest any effort. 

The convenience of direct deposit makes it an excellent payment option for employers with remote workers. Many employees work remotely part-time and full-time nowadays. Asking these remote employees to commute to the office to pick up a paycheck is inconvenient for all parties involved. It’s much easier to have the accounting department set up direct deposits for everyone. The paychecks will arrive in the right checking accounts on payday.

Safety

Of course, direct deposits are safer than cash and paper checks. Paper checks can be misplaced. If you lose a paper check, you may have to ask the issuer to send another one. This could result in a fee. If you think that check has been stolen, and you want to prevent someone from fraudulently depositing it, you may need to go through the steps of a stop payment. You may have to pay a fee to do this, as well.

Cash payments offer even less security. If your cash is lost, you may never be able to retrieve it. If it’s stolen, you might not be able to stop the thief from claiming the funds as their own and depositing them into an account. That money could be gone for good.  

Paperless

Are you trying to reduce your paper waste? Then, you can sign up for online banking services, opt out of paper billing statements and sign up for direct deposits whenever possible. Direct deposits don’t require issuers to use paper checks or envelopes. These small steps can reduce your contribution to paper waste.  

Direct deposits come with a lot of benefits. Choose this payment option whenever you can.