What qualifies as direct deposit

profile Erin Bruehl  |  May 17, 2021

What is a direct deposit? Many Americans can answer this question.

More than 80 percent of workers in the United States are paid via direct deposit. And close to 80 percent of those who do not use this system are somewhat familiar with it.

But plenty of American workers are paid in cash. They might be unfamiliar with direct deposit.

There are plenty of valid reasons why people might not know about direct deposit, and they could keep you from signing up for a program that could really benefit you.

What Is Direct Deposit?

Years ago, your reward for work well done came in one of two forms: cash or check. Direct deposit represents a whole new way to get money that's owed to you.

With direct deposit, funds move into your account automatically. You don't have to sign for them or otherwise authorize each transaction. Once you've signed up, the money appears with no work on your part.

Plenty of consumers associate direct deposit with paychecks from employers. But other organizations use the system too.

For example, 99% of Social Security payments come via direct deposit. The majority of benefits paid by Veterans Affairs come through direct deposit too. Tax refunds and unemployment payments are also frequently made via direct deposit.

In general, a direct deposit is a payment that:

  • Is authorized. You allow the money to come into your account through some type of enrollment process.
  • Might be repeated. Paychecks are often delivered every two weeks without additional required paperwork.
  • Enters automatically. You don't need to give permission or otherwise grant entry for the money.

Many consumers have several different types of direct deposit funds. If you get a tax refund and a paycheck, you're one of them.

Pros & Cons of Direct Deposit

Should you allow money to slide into your account without your explicit permission? Or should you stick with tried-and-true checks? Examine the benefits and drawbacks of direct deposits to make a smart decision.

Key factor to assess include:

  • Bank availability. This is a fairly major con of direct deposit plans. If you don't have a relationship with a bank, you can't get money via direct deposit.

    Some mobile banking apps, including Current, open accounts to people who have traditionally been excluded from the banking system. If you haven't looked into Current, it's time to change that.

  • Confidentiality. You must give your employer or the IRS information about your bank and your account to sign up for direct deposit. That can make some people uncomfortable.

    But as financial experts point out, direct deposit is actually more confidential than a check. Fewer people touch the transaction before the money is yours.

  • Planning. It can take days to verify your account before your direct deposit system works. You can't decide one day to accept electronic payments and see them in your account the next day.

  • Speed. Stick with checks, and your bank must verify the funds before they hit your account. That could mean waiting days for the money you're owed.

    Direct deposit doesn't come with any delays. For many consumers, that's a major perk.

Anyone could benefit from a direct deposit system. But if you have access to a bank, and getting your money as quickly as possible is critical, direct deposit could be ideal for you.

How to Sign Up for Direct Deposit

Your conversation begins with the party that owes you money. Every organization works a little differently, but most require the same pieces of information to get started.

With Current, you can easily sign up for direct deposit in our mobile app.

Gather up the information you need to begin, such as:

  • Routing number. This unique string of numerals separates one institution from another. You'll need it to ensure your money goes to the right bank. If you don't know your routing number, ask your bank.
  • Account number. These numerals identify your account, and they're critical in getting your money. Your account number isn't the same as the string of numbers on your debit or credit card. If you don't know the numbers, ask your bank.
  • Address. You'll need the mailing address of your bank or financial institution.
  • Account type. You can slide money into either checking accounts or savings accounts. You'll typically need to identify what kind of account you've chosen when you sign up for direct deposit.

When you have all the data you need, talk to the human resources department of the company you work for. Or fill out forms with your taxes or other government agencies to get the benefits you're owed. With direct deposit, you’ll ensure you get your money on a much quicker timeline.

Get Your Money Faster With Current

Sign up for direct deposit with a Current Premium Account, and we'll deliver your paycheck up to 2 days faster than traditional banks.

We make signing up really easy too. No matter how your employer requires you to sign up, we have all you need to sign up within our app on your phone.

We've explained all the details, and we're confident that we offer the best deal around. We hope you agree and you'll sign up soon. It takes just 2 minutes!

Banking services provided by Choice Financial Group, Member FDIC. The Current Visa Debit Card is issued by Choice Financial Group pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit cards are accepted.


Question of the Day: 82 Percent of Employees Receive Their Paycheck Via Cash, Direct Deposit, Check. (August 2018). Next Gen Personal Finance.

Social Security Administration Beneficiaries: Social Security Direct Deposit and Check Statistics. (October 2020). Social Security Administration.

Get Your Refund Faster: Tell IRS to Direct Deposit Your Refund to One, Two, or Three Accounts. (October 2020). Internal Revenue Service.

Direct Deposit. National Payroll Week 2020.

Choose Direct Deposit for the Fastest Way to Receive Your Refund. (February 2020). Internal Revenue Service.

Your Complete Guide to Direct Deposit. (February 2020). Forbes.

How Does Direct Deposit Work for Employers? (July 2020). Houston Chronicle.

What Is Direct Deposit? Here’s How It Works. (August 2020). MSN.

Call for Faster Paychecks Overlooks Key Facts. (August 2019). American Banker.

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