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Direct Deposit Overview
Direct Deposit is a great way to move money electronically. You don’t have to mail or sign any checks over to the bank, and your money tends to move more quickly when you use direct deposit.
Where to Set Up Direct Deposit
To set up direct deposit, just give instructions to whoever is paying you. If your employer offers direct deposit, ask the Human Resources contact what steps are necessary. The U.S. Government offers direct deposit for tax refunds and Social Security payments. Many investment and insurance payments can come to you via direct deposit.
How to Give Direct Deposit Instructions
Typically the institution that is paying you will have direct deposit instructions. Ask for a “direct deposit form”. Banks (or whatever institution is receiving the payments) probably has some type of direct deposit form also. This form will give you the information that you need to give to the payor.
Details of Direct Deposit Instructions
To set up direct deposit, you will need your receiving firm’s (your bank most likely) ABA Number. An ABA number (also known as a ‘Routing’ or ‘Routing Transit’ number will identify your bank uniquely within the direct deposit system. If you think of a phone number as the number that lets you call somebody, an ABA number is a number that lets you send somebody money via direct deposit. Just call your bank and ask what their ABA number is — they will know what you are talking about.
The next number you need for your direct deposit instructions is your account number. Your account number is most likely the account number you use every day. However, you may have a different number that you have to use for direct deposit. Again, it’s always best to ask for direct deposit forms from all involved to get it right the first time.
For an example of where to find your ABA number and account number on a voided check, see this sample form.
Some companies require that you submit a voided check or other document in order to set up direct deposit. This allows them to make sure that all information is valid, and it can be a security measure. Because direct deposit is all electronic, the goal is to make sure that money only moves to the correct account.
Finally, you may need an address of the receiving institution in order to set up direct deposit. This may not make sense because they’re sending the money electronically but this is a typical requirement.
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