Most of us have probably heard of direct deposits. It seems to be the trend of our automated society. But the link between increased cases of identity theft and the use of direct deposits can be worrisome.
What are Direct Deposits?
Many employers offer the option of direct deposit-that is, in exchange for your bank account information, they will have your paycheck automatically deposited every payday. The idea is a convenient one that saves both time and gas money. The government takes advantage of it too, pushing recipients of Social Security to choose to have their funds directly deposited into their accounts. Mailing checks costs money, making direct deposit advantageous on their end as well.
But is it safe?
The United States Department of the Treasury and the Federal Reserve Banks sponsored a survey to dispel what they call the "direct deposit myths." The direct deposit system has been around for over twenty years. The survey found that 40 percent of Americans don't use direct deposits. The United States Department of the Treasury and the Federal Reserve Banks have developed a public service initiative called "Go Direct." Here's what they want you to know:
- Using paper checks instead of the direct deposit system puts consumers at greater risk for identity theft and fraud.
- Direct deposit is the safest way to receive federal benefits. There are regulations set up to prevent fraud and mistakes.
- Direct deposits eliminate the risk of lost or stolen checks. Paper checks are easily lost or misplaced.
- Direct deposits give people more control of their money. Direct deposit users know the exact date, time and (sometimes) the amount that will be deposited into their account.
- Direct deposits provide people with access to their money from virtually everywhere.
- You are thirty times more likely to have a problem with a check than with a direct deposit.
- Direct deposit payments normally arrive on the agreed upon date at the same time each month and become available for spending almost instantly.
- Since fewer people handle direct deposits there is less chance for fraud.
- There is usually no charge for direct deposits.