As a worker in the US, knowing how and when you’ll get paid helps you manage your financial responsibilities. While direct deposit is the most common way employee payouts are sent, it’s not always clear exactly when they will arrive in your bank account.
Remitly is committed to supporting immigrants in managing their finances. In this article, we’ll walk you through everything you need to know about when your paycheck will arrive in your bank account.
Understanding direct deposits
While everything in the banking system runs electronically, deposit transfers aren’t always instant. They run through the Automated Clearing House (ACH), which processes payments in batches throughout each business day. This process can take 1-3 business days, but most employers schedule the payments in advance to ensure you receive your salary on payday.
Before direct deposit was possible, payments were given to employees as physical paper checks. These needed to be manually deposited at the bank. Once deposited, the receiving bank would have to confirm the check’s validity and that the employer’s bank had sufficient funds.
Standard timing for direct deposit
Many businesses account for the 1-3 business day lag time and schedule payments in advance so that the cash arrives in your account on payday.
Typically, the money you receive by direct deposit will be available to you between midnight and 9 a.m. on your payday, though this depends on your bank. Some financial institutions (more commonly fintech companies than traditional banks) may release the money early if they receive advance notice from the ACH file.
Factors affecting direct deposit timing
Role of employers and payroll schedules
With the 1-3 day processing time in mind, employers typically initiate your direct deposit in advance so that you receive your money on payday, as required by law. If there’s a delay, it could be due to errors or exceptional circumstances.
A human resources representative or accounts manager at your company will be able to provide further insight into the payroll schedule.
Influence of receiving banks and financial institutions
Most banks release direct deposit funds on the effective date. In some situations, for example, if the account is new or for fraud prevention measures, your access to the funds may be delayed.
As you decide which bank to work with in the US and what type of account you’ll open, consider asking about the processing times for direct deposits and ACH transfers so you can choose one that will give you access to your money as soon as possible.
Your bank’s processing times can also affect how quickly you’ll see a direct deposit reflected in your account—so don’t worry if your coworkers receive their direct deposits before you. Check in with your bank to understand their processing times.
Impact of holidays and weekends
Banks typically don’t process direct deposits on holidays and weekends. Many employers account for this by setting payday as a weekday rather than a numbered date. For example, you might be paid on the third Friday of every month, instead of on the 30th, to ensure that payday always falls on a business day.
Maximizing the benefits of direct deposit
Direct deposit doesn’t just save you time; it can also help you have a healthier relationship with your money, by improving your cash flow and allowing you to budget for your everyday life and financial goals.
Setting up direct deposit efficiently
Any time you join a new company or take on a new client, follow these steps to ensure that your direct deposit is set up correctly:
- Obtain payment forms. Ask your employer for the direct deposit form. They will likely be able to provide it in physical form or online.
- Provide your information. Fill out the form with your bank name, account type (checking or savings), account number, and routing number. You can find your account number on your banking documents or online account. A routing number is a non-personal number that identifies your bank. You can find this on the bottom left-hand side of checks, on bank statements, on deposit slips, or on your bank’s website.
- Attach any required documents. Some employers might require you to attach supporting documents, like a voided check, to verify your payment information.
- Submit to your employer. Confirm that all of your information is correct and submit the form to your employer.
Choosing the right accounts: checking versus savings
Typically, direct deposits can be set up with both checking and savings accounts. In some cases, it’s possible to split your direct deposit between accounts. Here are the pros and cons of each:
- Checking accounts. Send your direct deposit to your checking account if you plan on using it for daily expenses. Through the use of a debit card or personal checks, your checking account will provide easier access to your money. Checking accounts usually have low or no transaction fees, so if you’re going to be spending, this is the best place to deposit.
- Savings accounts. If you plan to save your money or won’t be spending it right away, consider sending it to your savings account. You’ll likely earn more interest in a savings account, which will help your money grow over time.
Utilizing early direct deposit features
Some banks offer an early direct deposit service that allows you access to your paycheck a day or two earlier than the typical timeline. As the middleman, they release your money when they receive the payment information from your employer. This service can help you improve cash flow and reduce the risk of overdrafts.
If you have recurring expenses that are automatically withdrawn from your account at the start of the month, early direct deposit might be helpful for you.
Troubleshooting direct deposit issues
The unpredictability of not receiving a payment on time can make it difficult to budget or plan for financial goals. Here’s what to do if you’re having issues with your direct deposit.
Common reasons for late deposits
There are a few different reasons why your direct deposit might be later than usual. Here are some of the pitfalls to look out for and how you can mitigate them.
- Incorrect bank information: If your account number and routing number were not recorded correctly by your employer, this can cause delays. When you onboard with a new employer or if you’ve changed your bank information, double-check that the numbers you submitted are correct. If you’re experiencing a late payment, contact your employer to check the information.
- Payroll processing errors: If your employer has submitted payroll after the bank’s cut-off deadline, direct deposit could be delayed by a few days.
- Bank holidays and weekends: The ACH network doesn’t operate on bank holidays or weekends. That means that if a payday falls on one of these days, the payment could be delayed. Many employers adjust their payroll schedules to avoid delays in these cases.
- Technical glitches: Sometimes, technical issues can be the source of payment delays.
Make sure that you’re doing everything in your power to control your direct deposit payments. If you’re a freelance worker and you’re responsible for submitting invoices, ensure you understand your clients’ deadlines for invoice receipt.
When and how to resolve direct deposit problems
If you still haven’t received your direct deposit three days after payday, it’s time to reach out. There are only two responsible parties in a direct deposit transaction: your employer and your bank.
First, reach out to your bank to see if they have registered any incoming direct deposits to your account. If they have, you can ask about the delay and the expected date of receipt of the incoming funds.
If your bank hasn’t registered any transaction, reach out to your employer. Have your payment details ready during this conversation, as the most likely reason for delay in direct deposit funds is a clerical error in entering your information.
Having an emergency fund to act as a financial buffer in the case of a delayed payment can help to mitigate the impact, such as fees for having to use your overdraft.
FAQs
Do direct deposits show up at midnight?
It depends. While direct deposits can show up as early as midnight, factors like the initiation time of the transfer by your employer, bank processing times, and ACH clearing can slow things down.
What time does the direct deposit hit?
You should expect payment between midnight and 9 a.m. on payday. However, there is no federal law in the US that sets limits on when you should receive payment on payday. Most states consider a payment on time if it’s initiated on payday, even if you don’t immediately have access to your money.
If you’re in a union or if you’re leaving a position and expecting a final paycheck, there might be contractual obligations for the timing of payment receipt. Check in with your union representative or human resources department to better understand these special cases.
Why might direct deposit be delayed?
This could be due to several reasons, such as incorrect bank information, bank processing times, or technical issues. Weekends and holidays can also affect processing times.
To ensure that you receive your money as quickly as possible, provide your payment information to your employer as soon as possible. Typically, they’ll need your bank account number and routing number. Making sure that this information is accurate will mitigate any delays.