Direct Deposit

Electronic transfer of payroll funds directly into an employee's bank account on payday — the standard method of wage payment in the U.S.

Direct deposit is an electronic payment system that transfers your paycheck directly into your designated bank account on payday, eliminating the need for a paper check. It uses the ACH (Automated Clearing House) network to move funds from your employer's bank to yours. Direct deposit is the dominant form of wage payment in the U.S. — the vast majority of employers offer or require it. Funds are typically available the morning of your pay date, though ACH transfers are initiated 1-2 business days earlier.

Most employers allow split direct deposit — directing a percentage or fixed amount to a savings account and the remainder to checking, which is an effective automated savings strategy. Some states require employers to offer a payment alternative for employees without bank accounts (payroll cards are common). Changing your direct deposit information requires submitting a new direct deposit authorization form to HR or payroll, typically with a voided check or bank account and routing numbers, with 1-2 pay cycles to take effect.

Setting Up or Changing Direct Deposit

  • You'll need your bank's routing number (9 digits) and your account number.
  • A voided check is the easiest way to provide this information — void it by writing 'VOID' across the front.
  • Submit the form to HR or enter it in your payroll portal (Workday, ADP, Gusto, etc.).
  • Allow 1-2 pay cycles for the change to take effect — you may receive a paper check in the interim.
  • If you close your bank account, update direct deposit immediately — returned deposits cause payroll delays.

Example

An employee sets up direct deposit when she onboards, routing 90% of her paycheck to her checking account and 10% to her savings — an automatic $450 savings transfer every biweekly pay period. She never thinks about it again and has $11,700 in savings after a year.