Direct Deposit

AAA

DEFINITION of 'Direct Deposit'

Electronic funds that are deposited directly into your bank account rather than through a paper check. Common uses of a direct deposit include income tax refunds and pay checks.

INVESTOPEDIA EXPLAINS 'Direct Deposit'

As a whole, direct deposit is the most popular form of payment as it eliminates the risk of losing a check and eliminates the need to physically visit a bank to make a deposit.

Direct deposit allows an employee's pay to be immediately available in their accounts at midnight the day before pay day and it is not subject to a check clearing wait period. Salaries paid via check can take a week or more to clear within their account.

Direct deposits are also popular for income tax refunds, as it is the fastest method of payment.

RELATED TERMS
  1. Income Tax

    A tax that governments impose on financial income generated by ...
  2. Electronic Payments Network - EPN

    An electronic automated clearing house (ACH) that serves as the ...
  3. Tax Return

    1. The tax form or forms used to file income taxes with the Internal ...
  4. Internal Revenue Service - IRS

    A United States government agency that is responsible for the ...
  5. Electronic Filing - E-File

    The process of submitting tax returns over the Internet, using ...
  6. Refund

    A payment from the government for an individual's overpaid taxes. ...
RELATED FAQS
  1. How long can I hold my HH/H Bonds and still earn interest?

      H bonds have not been issued since December 1979. They reached maturity and no longer earned interest after 30 years, so ... Read Full Answer >>
  2. What are some of the well-known no-load funds?

    The capital adequacy ratio promotes stability and efficiency of worldwide financial systems and banks. The capital to risk-weighted ... Read Full Answer >>
  3. How do you calculate payback period using Excel?

    Each financial institution offers similar products for its banking customers, including savings accounts, certificates of ... Read Full Answer >>
  4. What formula can I use to calculate interest on interest?

    Use the compound interest formula to determine the amount of accumulated interest on the principal amount invested or borrowed. ... Read Full Answer >>
  5. What are the pros and cons of online checking accounts?

    Online banking offers a convenient alternative to keeping your checking account with a brick-and-mortar bank. With an online ... Read Full Answer >>
  6. Why would you keep funds in a money market account and not a savings account?

    Most banks offer both money market accounts and savings accounts for depositors, although money market accounts are less ... Read Full Answer >>
Related Articles
  1. Insurance

    Your First Checking Account

    This owner's manual will show you what to expect from your bank.
  2. Savings

    Top Premium Checking Accounts of 2015

    Which banks offer the best deals for premium checking accounts – and what do you have to do to qualify for one?
  3. Economics

    Explaining Risk-Weighted Assets

    Risk-weighted assets is a banking term that refers to a method of measuring the risk inherent in a bank’s assets, which is typically its loan portfolio.
  4. Savings

    Understanding Savings Accounts

    A deposit account held at a bank or other financial institution that provides principal security and a modest interest rate.
  5. Personal Finance

    How The SWIFT System Works

    SWIFT has become the global standard for processing instructions and messages for payment and securities trade transactions. Investopedia explains what SWIFT is, how it works, how it makes money, ...
  6. Savings

    Review: Discover Checking Account

    Will having a Discover checking account save you money? It will save you fees.
  7. Savings

    Expat's Guide To Bank Accounts In The Philippines

    You'll need an ACR I-Card and other documents to open a bank account in the Philippines. Be sure to read the fine print about how much money is insured.
  8. Credit & Loans

    The Pros & Cons Of Personal Loans vs. Credit Cards

    One is not like the other. We help you decide where to borrow money from.
  9. Budgeting

    Should You Pay Your Bills On Autopilot?

    Now that you can sign up to have your bills paid automatically online, it it a smart way to make your life more efficient? A look at the pros and cons.
  10. Entrepreneurship

    Technology, The Biggest Threat For Big Banks

    Technology is the biggest threat to the future of big banks as we know them.

You May Also Like

Hot Definitions
  1. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  2. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
  3. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
  4. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  5. Productivity

    An economic measure of output per unit of input. Inputs include labor and capital, while output is typically measured in ...
  6. Variance

    The spread between numbers in a data set, measuring Variance is calculated by taking the differences between each number ...
Trading Center