You get quicker access to your paychecks, which can help you avoid overdrafts.Here are some of the benefits of direct deposit: Your employer’s bank debits the amount of your direct deposit from its account.ĭirect deposits have many benefits, which is why many employers and the government have adopted them.Your financial institution credits your account with the amount specified in the direct deposit request.The ACH Network processes the request and sends it to your financial institution.
Your employer’s bank sends a direct deposit request to the ACH Network on a predetermined day.How Do Direct Deposits Work?ĪDP, a payroll company many businesses use to process direct deposits, explains how it works: Banks that offer early direct deposit typically have restrictions on the types of direct deposits that qualify. What Is Early Direct Deposit?Įarly direct deposit is a feature offered by some banks that offers access to direct deposit funds up to two days before the processing of the transaction. The payer, like your employer, initiates an electronic payment deposited into your bank account rather than issuing a paper check.
A direct deposit is simply an electronic funds transfer through the ACH Network.
