Advantages & Disadvantages of Electronic Paycheck Bank Deposits

Electronic paycheck bank deposits are also known as direct deposit. In electronic deposits, paper checks are replaced by employers depositing earnings directly into an employee's bank account by payday. Three out of four working Americans who have direct deposit available for their pay have chosen to use it, according to the Credit Union National Association. Careful consideration of the pros and cons can help you decide if direct deposit is right for you.

Once you decide to participate in direct deposit and complete the paperwork, the transaction doesn't happen immediately. Your employer first performs a pre-notification on your account, a test process that happens before the actual electronic deposit transaction. Because of this, it may take one or two pay periods for your first direct deposit to occur. Confusion over when the money will be in your account could be costly. If you start writing checks before the electronic transfer happens and don't have enough money in your account to cover your expenses, your bank could hit you with fees.