Frequently Asked Questions about Direct Deposit

Here are answers to some common employee questions.

A: Direct Deposit is a safe, proven, confidential method of receiving a payment. Money is electronically transferred from a company or organization into your checking or savings account.

A: Most employers will issue a payment stub that is identical to what you receive with a traditional paycheck. It will show how much was deposited in your account and how much was taken out of your pay for taxes, insurance and other items. If your employer does not issue payment stubs, your bank will notify you within two days of receiving the Direct Deposit or will provide you with a telephone number to use to check the status of your deposits.

A: Typically, your payment is available first thing in the morning on payday.

A: Direct Deposit is a confidential way to send and receive payments. Although your company does have a limited ability to reverse your Direct Deposit payment, it can only access funds that were deposited in error, such as when the company has issued the transaction twice or issued a deposit in the wrong amount. Fewer people see your account information with Direct Deposit than with checks.

A: Yes. You can have your pay deposited into one account or split among several accounts. Decide once how you want your pay divided and your plan will be carried out automatically every pay period. This increases your financial control and discipline in saving for the future.

A: Problems with Direct Deposit are rare. In fact, you are much more likely to have a problem with a check. But if any problem should arise, contact your employer or your financial institution. The problem can usually be corrected immediately.

A: Just fill out a new authorization form with your employer and provide your written permission to switch accounts.

A: The benefits of Direct Deposit are convincing enough for most employees who use it. However, the following 11 states do allow an employer to mandate Direct Deposit: Alabama, Kentucky, Louisiana, Maine, Mississippi, Missouri, Nebraska, North Carolina, South Carolina, South Dakota and Washington. Utah only allows mandates under certain conditions. Check your state’s labor codes for the most current information.

SOURCE: The Direct Deposit and Direct Payment Coalition, March 2000. The coalition was formed to promote the benefits of Direct Deposit and Direct Payment to consumers, companies and the country. The coalition, composed of the Federal Reserve, NACHA: The Electronic Payments Association and regional ACH associations, sees Direct Deposit and Direct Payment as leaders in a system that is moving quickly to electronic payments of all kinds.