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Payments for Consumers

Get answers to some common ACH questions

  1. How does automatic payment work?
  2. How long does it take an automatic payment authorization to take effect?
  3. Can any financial institution send a direct payment or accept a direct deposit?
  4. Will I get a notification about the amount of the bill?
  5. What if I want to stop the automated payment plan?
  6. How will I know that my bill has been paid?
  7. Is there a charge for direct payment or direct deposit?
  8. What if I have a question about an automated bill payment?
  9. What if a company does not offer automatic bill payment?
  10. What is direct deposit and how does it work?
  11. What types of payments can be made with direct deposit?
  12. How do I sign up?
  13. How is money deposited into my account?
  14. Can I have part of my pay go to my checking account and part to my savings account?
  15. When can I access the money deposited into my account?
  16. What are the benefits of Direct Deposit to me?
  17. If I no longer get a paycheck, how will I know my account has been credited?
  18. With Direct Deposit, can the employer take money out of my account or obtain confidential information about me through my financial institution?
  19. Why do employers need a voided check to set up Direct Deposit?
  20. Will it cost me anything to participate in a Direct Deposit program?
  21. How will I get cash when I am on Direct Deposit?
  22. When can I withdraw payroll funds from my account if I use Direct Deposit?
  23. Do I need a financial institution account to use Direct Deposit?
  24. If I don’t want the joint owner of my checking account to know how much I make, how can I participate in Direct Deposit?
  25. What happens if I decide to change financial institutions?
  26. What should I do if my pay does not get direct deposited as expected?
  27. What if there is a discrepancy between my financial institution account statement and the deposit notice I received from my employer?
  28. How can I cancel direct deposit?
  29. Where can I get more information on direct deposit?

1) How does automatic payment work?

On the date shown on your bill, your utility/biller will inform your financial institution of the amount due. Because you have preauthorized the automatic payment, your financial institution will pay that amount from your account each time the biller notifies your institution that payment is due.

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2) How long does it take an automatic payment authorization to take effect?

Authorizations generally take 6-8 weeks to set up. Until you are notified that the automatic payment process has been completed, you should continue to pay by the method you have been using.

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3) Can any financial institution send a direct payment or accept a direct deposit?

All financial institutions can participate in direct deposit or direct payment. However, always check with your financial institutions before you set up a direct payment or direct deposit.

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4) Will I get a notification about the amount of the bill?

Each utility/biller will send you a copy of the bill at least 10 days before it is due with the amount and the due date. If the bill is a fixed amount, you will be notified when it changes or is adjusted.

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5) What if I want to stop the automated payment plan?

All you need to do is call or write your utility/biller. The number and address can be found on your bill.

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6) How will I know that my bill has been paid?

If you bank on-line, you can check your account to see that a debit has posted for the authorized bill. In addition, your utility/biller will show the debit on your monthly billing statement, and your financial institution will itemized the debit on your monthly account statement.

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7) Is there a charge for direct payment or direct deposit?

In most cases, utilities and other billers do not charge for automated payments and financial institutions often offer some types of incentives if you have direct deposit. In addition, you don’t need to worry about a check getting lost in the mail, and you have the additional savings of no postage.

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8) What if I have a question about an automated bill payment?

Just call the biller or talk to your local banking representative.

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9) What if a company does not offer automatic bill payment?

Contact that company and ask them to set up an automatic bill pay program or pay through your financial institution’s online banking. With your authorization, your institution will send an electronic entry to your biller or send a check. Before you set your online banking up, please check with your institution to see if there is a charge for using the service.

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10) What is direct deposit and how does it work?

Direct deposit is a safe and easy way to have your money deposited directly into your checking or savings account. The most common use of direct deposit is payroll. When you use direct deposit, you allow your employer to electronically transfer money into your financial institution account. So, instead of taking the time to cash a check yourself, the money will automatically be deposited into your account on an agreed-upon date. It’s that simple.

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11) What types of payments can be made with direct deposit?

Direct deposit can be used for any ongoing, regularly-scheduled payment, including salary payments from your employer and benefit checks from the federal government (Social Security, Supplemental Security Income, Civil Service, Railroad Retirement, and Veterans payments). Other payments include benefits issued by state governments (retirement and unemployment payments), pension payments, and income from your investments (certificates of deposit, annuities, and mutual funds). Some organizations are also using direct deposit to deliver occasional payments, such as tax refunds, business travel advances, and tuition reimbursements.

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12) How do I sign up?

Ask your employer if direct deposit is offered. If direct deposit is offered, you will simply obtain an authorization form and fill it out. On this form, you will indicate the financial institution information (i.e., routing and account number) from the bottom of your check. Sign the form and return it to your employer along with a voided check. If your employer doesn’t offer direct deposit, request that it be included as a benefit for employees.

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13) How is money deposited into my account?

At your employer’s request, their financial institution sends a credit to your account at your financial institution for credit on the predetermined date. Your financial institution then deposits this money into your account. You do not need to have an account at the same financial institution as your employer.

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14) Can I have part of my pay go to my checking account and part to my savings account?

If your employer offers this alternative, yes. Split deposits are common with direct deposit. You just need to let your employer know which accounts you want to make deposits into on the authorization form and the amount you want to go to each account.

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15) When can I access the money deposited into my account?

Your money will be available for you the morning of the payment date. In most cases, your money is deposited even before your financial institution opens for business! This is often quicker than if you deposit a check with a teller, in which case you might not have access to your funds until the next day or later.

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16) What are the benefits of Direct Deposit to me?

There are many benefits, including:

  • Greater control over your cash flow
  • Enhanced convenience, security, and reliability
  • Time savings

 

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17) If I no longer get a paycheck, how will I know my account has been credited?

Normally, employers provide Direct Deposit participants with a pay stub documenting your gross and net pay, along with state and federal withholdings and other deductions. In addition, your monthly statement from your financial institution will provide a record of the deposits made to your account. You should always keep the stub from your employer for your tax records since it lists all your deductions.

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18) With Direct Deposit, can the employer take money out of my account or obtain confidential information about me through my financial institution?

No, consumers actually have more privacy with Direct Deposit. As many as 10 people handle your check from the time it is written by the employer until the funds are finally transferred to your financial institution. The amount of information provided on a check is astounding, including: consumer’s name and signature, date the check was written, to whom it was written, the dollar amount, consumer’s address, Social Security number and/or driver’s license number, telephone number, the date the consumer opened the account, and the financial institution’s identification and consumer’s account number. With electronic payments, the transaction passes electronically from the originating financial institution to the receiving financial institution. In between financial institutions, the information is protected by encryption, message authentication codes, and other security procedures. Please note: there is one exception to this answer. If a deposit was made in error, your employer reserves the right to instruct a reversal of funds from the financial institution.

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19) Why do employers need a voided check to set up Direct Deposit?

Employers use the micro-encoded financial institution routing numbers and account numbers which appear on the bottom of the check to set up your Direct Deposit properly. These numbers can be difficult for customers to read, so sending a voided check ensures that your payment will be processed properly.

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20) Will it cost me anything to participate in a Direct Deposit program?

In most cases, participating employers and financial institutions do not charge any additional fees for Direct Deposit. In fact, your demand deposit account charges are likely to decrease since many financial institutions offer “free” checking account services to customers using Direct Deposit.

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21) How will I get cash when I am on Direct Deposit?

You can obtain cash the same way you normally get cash between paydays. For example, you can use an ATM machine or financial institution drive-thru, or you can walk into your financial institution and ask for a withdrawal.

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22) When can I withdraw payroll funds from my account if I use Direct Deposit?

Payroll funds are available to you when your financial institution opens for business on payday. In many cases, withdrawals can even be made against pay at ATMs early in the morning on payday even before your financial institution opens its doors and teller windows for business.

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23) Do I need a financial institution account to use Direct Deposit?

Yes. An account at a financial institution is necessary for you to receive Direct Deposit payments. Some financial institutions offer free or low-cost checking or savings accounts when you use Direct Deposit, so be sure to compare the services in your area.

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24) If I don’t want the joint owner of my checking account to know how much I make, how can I participate in Direct Deposit?

The best way to keep transactions confidential from a joint-account holder is to open another single account. Depending on your employer’s policies, generally portions of the pay can be sent to more than one financial institution or account.

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25) What happens if I decide to change financial institutions?

You will need to inform your payroll office and complete a new authorization form. Your employer will then designate your pay to be deposited to your new account at your new financial institution. Keep your old account open until your pay is deposited into your new account to avoid any delays in crediting your account.

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26) What should I do if my pay does not get direct deposited as expected?

This is very unlikely; however, if it happens, check with your financial institution first to see if they received your Direct Deposit. If not, report this to your employer’s payroll office and request that they trace the Direct Deposit.

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27) What if there is a discrepancy between my financial institution account statement and the deposit notice I received from my employer?

This is also very unlikely. More errors occur with check processing than with electronic processing. However, if this occurs, you should notify your financial institution and employer immediately. You have up to 60 days from your account statement date to notify your financial institution in person, by telephone, or in writing of an unauthorized deposit or incorrect deposit amount. (If you notify your financial institution in person or by telephone, you may also be required to provide written confirmation within 10 business days.) If your financial institution needs more than 10 business days to investigate and resolve your situation, it must credit the amount in question to your account during the investigation.

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28) How can I cancel direct deposit?

You can stop direct deposit by informing your employer. They will tell you how to cancel the service. Most organizations will ask you to put your request in writing. It may take at least one pay period to process the request. If you are terminating direct deposit because of problems, you should advise your employer. Any problems usually can be ironed out without terminating the convenience of direct deposit.

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29) Where can I get more information on direct deposit?

To receive more information on direct deposit, please contact your employer or financial institution. To receive a copy of Regulation E, which outlines the legal requirements for consumers, corporations, and financial institutions who use direct deposit, you can contact the Public Affairs Department at your nearest Federal Reserve Bank or look online at the Federal Reserve's Website

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