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What is Direct Deposit?
Direct deposit is an electronic payment method, also know as an ACH (automatic clearing house), that allows funds to be transferred directly into your bank account. This process eliminates the need for paper checks, reducing the risk of lost or stolen funds. It is widely used by companies to execute payroll. It is also used by the Social Security Administration to pay benefits, and the IRS and state tax agencies to distribute refunds.
Advantages of Using Direct Deposit
Speed – Direct deposit is significantly faster than receiving a paper check. The Federal Reserve now does deposits several times a day since 2020.
Security – Since the funds are transferred electronically, there is no risk of your check getting lost or stolen.
Convenience – You do not need to visit your credit union to deposit your refund. The funds are automatically available in your account once processed.
Multiple Account Deposits – Some agencies allow you to split your payment across multiple bank accounts, giving you flexibility in managing your finances.