Why Switch from Paper Check to Direct Deposit?

Over the years, physical checks have become increasingly outdated and replaced by the convenience of automated direct deposits. Yet there are still a handful of employees out there who receive printed checks.

But why?

After doing some research, I have discovered the top four reasons why some people have not yet switched to direct deposit. And while some reasons may seem valid, I shamelessly included the advantages of direct deposit that may make them reconsider.

Time Concerns  

Switching your paycheck from a live check to a direct deposit account does require a few minutes to set up but is not overly time intensive. You will need to have your bank account information (checking and/or savings account) including routing numbers handy, and will need to know whether you would like to deposit the entire check into just one account or spread it over multiple accounts.

In total, the initial set up of direct deposit may take up to five minutes (unless you do not have a bank account). Going forward, switching or adding additional direct deposit accounts is quicker than updating your social media status.

No Bank Account  

If you do not have a bank account, the time needed to switch to direct deposit is significantly longer. You must first have either a savings or checking account in which your paycheck will be deposited; otherwise, your employer will need to cut you a live check or electronically deposit funds into a *pay card.

You may want to spend some time researching different types of accounts available and whether you want to go through a credit union or bank. Each institution has their own unique account requirements and will require you to provide some type of identification.

Once you decide on a banking institution and what type of account you would like, creating an account is fairly quick.

*Please note: if you do not want to go through the hassle of creating a personal account, many employers like Stratus HR offer a pay card. This is a great option to receive the conveniences of direct deposit without requiring you to open a personal bank account.

Privacy Preference  

Some employees may not want to disclose their financial institution information to their employer to give themselves a sense of privacy and control. Having a paycheck in their hand allows them the option of choosing to deposit it at their convenience.  

While it is understandable to want to maintain as much privacy as possible, remember that your employer is required by law to already have most of your sensitive data on record: your full name, birthdate/age, address, social security number, marital status, tax withholding status, and any other details collected when you were first hired. They are legally bound to keep all your sensitive information private.

Lack of Understanding: “How Do I Make the Switch?”  

When you have a bank account set up, are able to set aside a few minutes to switch to direct deposit, and have no privacy concerns – but have not yet switched to direct deposit – chances are you are unaware of how to make the switch.

If you are an active Stratus HR employee who did not set up direct deposit when first completing your new hire paperwork, it is not too late! Simply do the following:  

1. Log into SplashTrack  
2. Click “About Me”  
3. Select “Direct Deposit”  
4. Click “How to?” for detailed instructions

In the event you are interested in the pay card option rather than direct deposit, select “Click here to get started” just after the “Enroll in pay card” section. Clicking this will launch the process for one of our team members to contact you, as well as provide you with a link for more information about the pay card.

What is "pay card"?  

A pay card, or payroll card, is like a debit card issued to you and funded electronically with your wages on payday. You can make purchases in stores, online, or by phone with a pay card, just as you would with a prepaid debit card.

Payroll cards allow you to withdraw money at any participating ATM or bank without fees. You also have the option to withdraw “cashback” money from the card when you use it for a debit purchase.

When setting up direct deposit, should I select dollar amount or percentage?  

Deciding between a specific dollar amount or percentage of your paycheck is completely up to you. However, there are a few things to understand about one or the other.

When your employer allows you the option to set up multiple direct deposit accounts, you can predetermine how much of your paycheck should be allotted to each one by selecting either a specific dollar amount or a percentage of your paycheck.

If you choose to fund one or more accounts by a specific dollar amount, be sure you specify the remaining balance goes to another account. For example, if you choose to have $500 deposited into your college child’s bank account but typically earn more than $500 per paycheck, choose to have the balance funded into another account. If this step is missed, the balance will have to be cut as a live check.

When you choose to have multiple accounts funded by a certain percentage of your paycheck, be sure the percentages added together result in 100%. This will ensure 100% of your paycheck is deposited into all the accounts, with no balance needing to be cut as a live check.  

Simplify Your Payday: Make the Switch to Direct Deposit or Pay Card  

If the convenience alone is not enough to convince you to switch from live check to direct deposit, consider the following direct deposit benefits:

1. Instant Access to Funds 

With direct deposit, your paycheck is electronically transferred directly into your account on payday. This means no more signing and taking pictures to manually deposit the check – or even worse, driving to the ATM or bank right after work and waiting in line. Your money is available to you immediately.

The same advantage applies to using a pay card. Your wages are electronically transferred to the pay card on payday and ready to be used immediately!

2. Save Time and Effort 

Not only is your money instantly accessible with both direct deposit and pay card options, but removing the hassle of physically cashing paper checks frees up your time for more important tasks.

3. Security and Reliability 

Paper checks can be lost, stolen, or damaged, leading to potential complications and delays in accessing your funds. When paychecks are lost or stolen, the employee must pay for a stop payment on the check, which requires a bank fee. And if the check is still cashed, your employer is held liable for those funds.

Direct deposit and pay card options eliminate these risks by securely transferring your money electronically, ensuring that your hard-earned cash is safe and accessible whenever you need it.

4. Environmentally Friendly 

By opting for direct deposit or a pay card, you are contributing to environmental sustainability by reducing the need for paper checks, envelopes, and other resources associated with traditional banking methods. It’s a small yet impactful way to make a difference.

5. It’s Free 

With Stratus HR, you can directly deposit your money into multiple accounts at no cost to you!

While the pay card option does not have the advantage of multiple accounts, it is also available at no cost to you and can be used at all participating banks and ATMs with no fees.

Final Thoughts on Direct Deposit vs Check  

Moving your pay preferences from paper checks to direct deposit payments will streamline your financial transactions and enhance your overall pay experience. While it takes a little time and effort, making the switch to direct deposit or pay card is a simple and seamless process that offers numerous benefits.

To learn more about the benefits of direct deposit or for more help getting started, please contact your certified Payroll expert. Not a current Stratus HR client? Book a free consultation and our team will contact you shortly.