Why I Prefer Direct Deposit Over Paper Checks

When it comes to how one’s paycheck gets to the bank, there are two main options for employers and employees alike–the paper check and direct deposit. Many employers will only provide one or the other, depending on what state laws permit.

At the remaining group of companies, employees can choose either option. That’s where I come in to sell you on the benefits of direct deposit. I believe, without a doubt, that’s it’s a better option for 99% of employees today. Here’s why:

  1. Immediate availability. My direct deposit hits the bank the morning of my payday, and I’ve even heard that some will go in a few days before you are due to get your paper check. It’s also immediately available for spending, while my paper checks were always on a minimum one-day hold. Faster and more reliable deposits mean confidence in scheduling bills and payments, even when you plan to be away.
  2. No bank trips. With a paper check, I have to be available to pick up the check, drive to the bank and deposit it. With direct deposit, I get paid even if payday falls on a weekend or holiday, or if I happen to be on vacation or sick. I also save 30 minutes and half a gallon of gas every 2 weeks by not making the trip.
  3. Human error. Direct deposit is not foolproof, but I’ve never had a problem with the system. Paper checks on the other hand can be late arriving, the boss might be away on business or pleasure, or someone in the chain may simply forget to distribute payroll this week until they’re reminded.
  4. Safety and security. Checks are subject to fraud (by other employees, for example), theft (and subsequent fraud by whomever stole it), or loss. Putting a stop-order on the old check and cutting a new check might take time, possibly weeks. Can you afford to wait that long to get paid?
  5. Automation. Most companies will let you split your direct deposit between multiple accounts. If you’re into automating your savings (which is a great method of growing your savings account), this is a perfect opportunity to ensure that it happens seamlessly.
  6. Electronic paperwork. In addition to direct deposit, my company and many others now offer online record-keeping for paystubs and even W-2s. That means less opportunity for fraud or revealing your income to coworkers, and less time spent shredding unnecessary paystubs.
  7. Banking perks. The majority of banks have some kind of minimum balance requirement to avoid fees on their basic checking accounts, but many also offer fee waivers with a direct deposit to your account. It’s a perfect way to get paycheck convenience and ensure you have a free account indefinitely.

Direct deposit is the natural evolution of the paycheck, and it provides the necessary security and convenience we’ve come to expect from an automated, Internet-based world.

How to Get Started

If you’re interested in getting direct deposit, step one is to find out if it’s available in your company, either from your boss or the accounting/HR departments. If it is, great–all you usually need to do is fill out an enrollment form and provide a voided check to verify your bank account information.

If direct deposit isn’t an option, all is not lost. Depending on how much clout you have with your superiors, there may be an opportunity to persuade them with the right approach. For many companies, the benefits of direct deposit are as enticing as they are for the employee:

  • Less paperwork and accounting to handle
  • Automation
  • Improved employee morale
  • Potentially reduced payroll costs
  • Increased security and decreased hassle dealing with problems

There’s enough there to make any good business owner think twice about the opportunity, and it’s definitely worth a shot.

(Photo credit)

9 thoughts on “Why I Prefer Direct Deposit Over Paper Checks

  1. Great article WOJO! My favorite line is “Direct deposit is the natural evolution of the paycheck,” because it’s so true. I’m always baffled when I hear about employees who prefer receiving a paper check. They also prefer paying a check cashing fee every pay period.

  2. I have had direct deposit since 1973. It is one of the best ways to receive your paycheck. My bank gives me a free account because of it. It is convenient and saves me money.

  3. My previous employer did not offer direct deposit because the owner wanted to personally sign off on each check due to a past accounting issues. It was a huge pain! I recently discovered the next best thing to direct deposit. My bank app (Chase) on my smartphone allows me to digitally deposit checks by photographing both sides of the check and manually entering the $ amount. This takes only a minute and my checks are accepted the same day – I like how they send a follow-up email to let you know when the check has been approved.

    1. It looks like a lot of banks are now starting to offer this, and you’re right–it’s definitely the next best thing. I can see why the accounting issues would be a painful memory for the boss, but I’m pretty sure you get a statement every payroll with all the checks. Maybe it was just a mental thing for him.

  4. I definitely agree that direct deposit can simplify your life so much. So many people I know who have it say they love that they don’t really have to think about it – they know the check came and it’s already in the bank waiting for them! I’ve only ever had direct deposit once, and I liked it just fine. For my other jobs I always liked seeing my checks so I knew exactly how much was coming in. Plus one of my jobs was right next door to the bank, so walking over there was a fun little trip I guess. Haha

    1. Good point, I think if my check was variable, I’d be more inclined to see it in person every week, but the amount for me doesn’t change for years at a time.

  5. My daughter and I JUST had this discussion. She’s working her first job and I mentioned that she should direct deposit her paycheck. “What’s that?” She was amazed that a check could go right into her bank account.

    Of course you know what that meant…her employer didn’t offer direct deposit. We’ll follow Shannon’s thoughts above for her (for now).

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  7. My direct deposit doesn’t show up in my bank account for 2 days after payday. Is this legal? Or acceptable? I’m in Alabama. If I want a paper check I can get one on payday – Monday. If I leave it as direct deposit, the money isn’t in my account until Wednesday. I thought direct deposit funds were supposed to be made available ON payday. I’m having a difficult time finding information online to support my argument.

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