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:
- 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.
- 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.
- 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.
- 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?
- 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.
- 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.
- 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
- 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.