What is Direct Deposit?

Direct deposit is a way to electronically transfer money into your Anchor account, without any fees!¹ It uses the Automated Clearing House (ACH) network, which connects over 25,000 financial institutions in the US, to move funds from the payer's account to the payee's account. 

Direct deposit is a convenient alternative to normal deposits. For employers, it allows you to send funds to your employees' accounts on payday without delay or the risk of checks getting lost in the mail. For recipients, the money is automatically added to your Anchor account balance, so there's no need to wait for a check to clear.

Uses of Direct Deposit

One of the most common uses of direct deposit is for employers to transfer employees' wages directly into their personal bank accounts as part of the payroll process. Other use cases include:

• Government Benefits: The majority of government benefit programs, including Social Security, Supplemental Security Income (SSI), benefits offered by the Veterans Affairs, and unemployment benefits, provide recipients with the option to receive their payments by direct deposit.
• Tax Refunds: Taxpayers have the option of selecting direct deposit as the method to receive their tax returns from the government.
• Dividends: Shareholders can choose to receive dividends from the company via direct deposit.
• Rental Income: Landlords may set up direct deposit with their tenants, which enables them to receive rent payments on a regular basis directly into their bank accounts.
• Commissions: Sales representatives, agents, or freelancers who earn commissions may choose to receive their commission payments via direct deposit.
• Child Support: Parents may receive payments for child support by direct deposit, which is a technique that is both constant and reliable for receiving financial support.

How to Set up Direct Deposit with your Employer

Setting up direct deposit varies from employer to employer, but your human resources or payroll department should be able to help you get started.

To set up direct deposit follow these steps:

1. Obtain a direct deposit form or visit your employer's HR web portal.
   • You may be asked to provide personal details such as your name, address, and Social Security number.
   • You will be asked for your Routing Number and Account Number, which you can get from the Anchor App.
2. Get your Anchor Routing Number and Account Number in the Anchor App:
   1. 1. Tap Settings > Direct Deposit > Account Details
      2. Tap the "Show Account Details" button
3. Copy your Routing Number and Account Number to your employer's form or to your employer's HR web portal.

Note: All Anchor bank² accounts are Checking accounts.

How Long Does Direct Deposit Take?

It normally takes 1-3 days for direct deposits to clear. The actual transfer of funds is almost instantaneous, but it can take a few days for your bank to verify the funds and make them available to you. Weekends and public holidays can slow this process down, as can other factors.

In some cases, employers will factor this time frame into their payroll system, so you'll receive your deposit on the day you are meant to get paid, rather than three days later. You can typically withdraw the money the same day it hits your account, but in some cases, you may not be able to access it until the following business day.

Risks of Direct Deposit

A risk of direct deposit is cybersecurity, as the payments are made electronically. However, banks and other financial institutions take measures to ensure safety and data protection.

Another risk is fraud. However, banks and employers often use industry best practices to prevent fraud, including the use of micro-deposits to verify the account's existence and ownership.

¹ Anchor and its banking partner, the receiving financial institution, do not charge any fees for direct deposit. Anchor is not responsible for any fees or charges from third parties, including the originating financial institution.

² Anchor is a financial technology company, not an FDIC insured depository institution. Banking services, including deposit accounts and Automated Clearing House (ACH), provided by Bangor Savings Bank, Member FDIC. FDIC insurance coverage protects against the failure of an FDIC insured depository institution. Pass-through FDIC insurance coverage is subject to certain conditions.