How Long Does Direct Deposit Take in Different USA Banks – (And Why)?

Exact Answer: 3-5 days

Direct deposit is a term used in banking to describe the direct deposit of money from a payer’s bank to a payee’s bank account. It is usually done through electronic fund transfer either by using online services, mobile phone applications, or telephone banking.

Direct deposits are a typical feature of many businesses today that use this banking service for payment of salaries and wages. Businesses also find it easy to pay bills, taxes, and their suppliers through direct deposits. All payments by companies pass through an automated clearing house (ACH) before payments can be made to the respective payees.

How Long Direct Deposits Take in United States

Direct Deposit TypeTime
Mobile applications and websitesAbout 5 business days from the day the direct deposit was initiated.
Money from external accounts or other banksAbout 3 business days from the day the direct deposit was made.
Debit cardsReceived within minutes.
Green dot2 hours after initiation of transaction.

Many factors determine how long direct deposits will take:

1) Direct deposit system

How long direct deposits take is mainly determined by the services employers use to make these direct deposits and the banks involved. as shown in table above, there are various ways to make direct deposits through.

2) Holidays and weekends

If a public holiday happens to be on a business day, the time taken for the money to reach a payee’s bank account will be longer. As it is for holidays, direct deposits made on weekends or Friday past 5 p.m. usually take longer than standard time to process.

3) An employee on hire or new employee

Employees that have just been added to the payroll may be subject to a delay in receiving their salaries or wages. These delays can go up to five business days.

Why Does Direct Deposit Take That Long?

It is a familiar routine for many employees to visit the bank on their payday. The availability of the cash in their bank account mainly depends on how early the employer makes the direct deposits.

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However, direct deposits are processed differently, depending on the banks involved. Each bank has its own processing time, with some banks taking up to a week to avail funds into the payee’s bank account. For direct deposits involving money transfer from one bank to another, how long it will take depends on how fast the banks involved process the direct deposit request.

Banks are usually closed on holidays and weekends. An employer should initiate a direct deposit one or two days early in anticipation of the holiday delay, therefore, ensuring the employees get their money on their regular paydays.

If it also happens that the payday is on the weekend, the money will be availed to the employee’s bank account at the start of the following week. Banks only operate on business days, from Monday to Friday.

Banks usually place payments for new employees on hold and first seek clearance from the employer. These delays can extend up to 3 months before the bank adapts to the new payroll list from the employer.

Conclusion

Many businesses seek the services of the ACH to pay their employees. The ACH decides on which direct deposit system to use depending on the bank charges. Each bank has its regulations and timing when it comes to direct deposits.

The payer must also take into consideration the direct deposit system used and anticipate the time taken before the money reaches the payee’s bank account. The payer is the primary determinant on the date the funds will contact the payee. The earlier the employer initiates the direct deposit, the earlier it will reach the employee.

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