Enrolling in direct deposit can be as easy as one, two, or three. If your employer has an online system that allows you to update your tax, banking, or personal information quickly, then the ability to enroll in direct deposit is right at your fingertips. Some individuals may feel uncomfortable providing their employer with their personal banking information. Or, they may have a general mistrust of banks and want the cash from their hard-earned work in their hands. However, there are downfalls of not having direct deposit set up, and it could cause your pay to be delayed. Why would your pay be delayed?
Five Reasons Why Direct Deposit is Important
Living in the southern United States, there have been multiple occasions where employers, banks, and other businesses have closed early in anticipation of an impending storm. During these times, some employers may process payroll early. However, if you receive a physical check for your wages and your employer cannot process a check in-house, you will have to wait until offices reopen to receive your paycheck. If you travel to escape the storm and depend on your next paycheck for transportation, lodging, and food costs, you may have to weather the storm in your current location.
Sometimes, payment processors have weather delays when they ship checks to employers. If this occurs, your employer cannot control when paychecks arrive. When this happens, voiding a paper paycheck or printing checks in-house requires that employers receive verification that checks have been canceled, causing further delays.
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You Don't Have Time to Make it to the Bank
If you live a hectic life, work long hours, or the bank in your local area closes before you have time to get there, your paychecks could pile up. We all have bills due at a certain time, and the utility company or landlord doesn't want an excuse that you couldn't make it to the bank.
By using direct deposit, you can ensure that your paychecks make it to the bank on the specified pay date. It will also ensure that your bill, utility, and rent or mortgage payments are never late. This can reduce late fees and additional interest you could be charged for not making your payments on time.
You Can Save Automatically
When you receive your paycheck via direct deposit, you have two options. You can have your pay sent to your checking account, or you can split it so a portion goes into your savings as well. By enrolling in direct deposit, you can build your savings fund automatically, and your employer can help you do that through automatic savings enrollments. Suppose you have your direct deposit sent to your checking account. You can create an automatic transfer with your bank for a portion of your earnings to be automatically sent to your savings account. Your savings will grow continuously and automatically.
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Your Check Could Get Lost
It's in the mail. It's an old phrase, but it does happen. Have you ever lost a check and had to request that someone writes you another check? If you lose your check, your employer will have to go through a verification process to determine if your paycheck was cashed. This process could take days. Once confirmation is received, the employer can cancel your paycheck and reissue you a new one. If waiting up to a week or longer for this process to complete is unacceptable for you, then an alternative option is to enroll in direct deposit to ensure your paycheck is never "lost in the mail."
You're Not Comfortable with Using Technology
Being uncomfortable with technology spans multiple generations. It's not specific to one generation because the rate at which technology changes can make it confusing to many. However, when it comes to ensuring that you receive your paycheck timely, it's important to ensure that you keep up-to-date with the latest technology your employer uses.
Staying up-to-date with technology is essential when you need to make changes to your tax withholding or direct deposit information. You're right if you think that you don't have to worry about technology when you receive a paper check. However, most employers don't allow employees to receive a paper check. You will have to get familiar with technology to ensure that your income is deposited into the correct bank account. This is essential, especially if you need to switch banks or adjust your direct deposit.
Discuss your options with your employer to see how you can enroll in direct deposit. If you are unfamiliar with the technology they use, have a human resources member show you how to use it and the options you can use to update your personal information.