Direct deposit is when money is deposited automatically into a person's bank or credit union checking or savings account using electronic technology. The bank or credit union receives an electronic payment directly from the payor on behalf of the account holder. Direct deposit is most commonly used at work sites with employee paychecks. Another frequent use for direct deposit is regularly scheduled financial transactions, such as Social Security, pension, reverse mortgage, and annuity payments. Sometimes direct deposit is required by the payor to prevent loss of checks that are mailed. Investors can also request regular investment account (e.g., mutual fund) withdrawals via direct deposit of a specified amount into their bank accounts.
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