Direct Deposit - What constitutes one?

Oct 29, 2013: We often publish bank bonuses that have direct deposit as a mandatory condition to earn the bonus. Recently we received a question from one of our readers regarding the nature of transactions that qualify as a "direct deposit."

Reader's Question
What are the various types of direct deposits? Does an ACH transfer qualify as a direct deposit?

Before we cover the various types of direct deposit, let us first look into its definition and advantages.

A direct deposit allows your money to be deposited automatically to your bank account. This is very convenient since your checks are electronically deposited into your checking or savings account. So your money will be there for you even if you are too busy to go to the bank or are out of town on a vacation or perhaps ill. Direct Deposit allows you to have access to your money on the day of deposit itself. So you don't have to worry about checks getting lost, delayed or stolen.

It is to be noted that it can take one to two months for a bank to process your request and to begin receiving electronic deposits. Please call your bank and inquire about their specific details before setting up a direct deposit.

Different Types of Direct Deposit
  • Salary / Wages
  • Pension
  • Dividend / Investment Income
  • Social Security (SSA)
  • Supplemental Security Income (SSI)
  • Railroad Retirement
  • Civil Service Retirement
  • Veterans Compensation and Pension
  • Other Federal Agency Benefits
Various banks might have a customized set of regulations and forms for setting up different types of direct deposits. Please call your bank to find out the exact details.

Is an ACH Transfer a Direct Deposit?

An ACH Transfer might qualify as a Direct Deposit depending on the bank's policy for direct deposits. For example, Chase accepts an ACH transfer as a direct deposit. Some banks might not accept an ACH transfer as a direct deposit. They may demand a more conventional type of direct deposit like your salary or wages. It's best to call your bank and find out whether they would accept an ACH transfer as a direct deposit or not.

Direct Deposit offers great convenience but has its caveats as well. We discussed about it based on a friend's real life experience.

We hope that we have answered your query about direct deposit. Please find out the specific details from your bank and make an informed decision. We wish you all the best with direct deposits.

Image Source(s): iStockPhoto

Related Posts