Conference 7.286::dcu

  One possible reason is that it saves them the labor of having the paycheck
cashed and/or deposited by hand. The money has to get into the account some-
how, unless the account is rarely used.

Not to mention they get the money regularly and on time.  A check sitting
in your sock drawer doesn't do you or your bank any good.

re: .0

Al, I think they like it because they know that once you start it, it takes
time to stop it.  Hence, you are less likely to get p!ssed at them one day and
take your next check somewhere else and open an account.

Bob

    I would say it's the predictability of the deposits coming in. 
    Remember, a banker or credit union manager is managing a cash flow, and
    the more s/he has coming in regularly, like clockwork, the more
    predictable the business is.  Also, Auto deposit is done
    electronically, resulting in less paperwork for the institution to
    collect the money.
    
    (also, I asked my Sister-in-law, who manages a local branch)
    
    Gil
    

       I just talked to Corporate payroll. I was told that "within the next
    couple of months" it will be possible to direct deposit the net amount
    of your pay into EITHER a checking or savings account at any
    institution willing to do it. You will not, however, be able to put a
    part of it into each account. The entire net must go to one or the
    other. This is a small step, but it seems DCU will still be the only
    place you can directly deposit into both.
                                            Denny

    
    
      >DCU will still be the only place you can directly deposit into both.
    
    
      Along with all the other paperwork I got from NFCU recently 
    	(Including my new checkbook :^)   there was a form to allow
    	me to elect how I wanted net pay distributed  among my NFCU
    	accounts.
    
      From what I can infer,  the money comes to NFCU "Addressed" 
    to a particular account.  Since NFCU then apparantly has the ability
    to further distribute the  arriving funds,  I would imagine that other
    banks can do it as well,  regardless of how the  DEC direct deposit
    software works.
    
    
    						-al
    

    I just talked to a couple of banks in the Harvard/Ayer area.  Both said
    they would accept direct deposit split among accounts IF MY EMPLOYER
    WOULD ALLOW IT.
    
    My husband works for the Mass. Water Resources Authority and he could
    split his as much as he liked.
    
    So why has DEC let DCU split deposits but no other bank?
    
    Elaine

    
    I don't believe (I don't know for sure) that DCU lets your NET pay go
    into more than one account.  They do however allow a PAYROLL deduction
    that can be split many ways once received by DCU.  I guess that the
    payroll deduction is a "benefit" of using DCU. ;-)
    

Your bank may allow you to split up your deposit, but initially it has
to be routed to a checking account.  If you don't want to have a checking
account at your bank, you're out of luck unless DEC payroll gets its act
together and allows direct deposit to savings.

For instance, you can't close your DCU checking account, but still
have direct deposit to a DCU savings account, right now.  You have to
have a checking account and pay the fees.

There are some people grandfathered under an earlier direct deposit
scheme that did allow your net pay to go directly into a DCU savings
account, but no more...

Tim

    There are quite a few reasons that banks like to have you direct
    deposit your paycheck:

    1)  Less paperwork.  The electronic deposit means less paperwork
    for the bank.  Less paperwork reduces overhead that the bank must
    incur to process a "live" check.  Plus, there is no anticipation
    that the check will bounce once it's deposited; the funds are
    already there.

    2)  The bank can use the money.  If a payroll for a bunch of
    people is deposited in the same bank, it increases the assets of
    the bank (no big secret revealed here).  The bank can take that
    money and invest it in something else, as long as it doesn't go
    below the reserve ratio that the bank is obligated to maintain by
    law.  Some of these "investments" can be made overnight, or just
    over the period of a few hours.  The bank gets a big lump of cash,
    and invests it, knowing that you can't possibly get to that cash
    in your account before X amount of time (hopefully, most banks are
    smart enough to do some statistical studies on their deposits and
    withdrawls, and have a fairly good idea of how long they can use
    the money before a check or withdrawl comes to claim it). Lots of
    institutions close up, count their deposits, clear their checks,
    and see what's left over to invest for the day (over and beyond
    the required reserve ratio).  This "excess" cash is thrown onto
    the world market, and if the bank is savvy enough, the money
    follows the daylight (moving west through lots of time zones)
    eventually making it back to the orginating institution with a few
    bucks added in interest.  What kind of investments are made?  Take
    your pick.  I would think most of them are placed into money
    markets, where a company desires a short term loan (any from a
    couple of hours to a day or two) to make a payroll or something
    similar.  As you would expect, the company pays dearly in interest
    and fees to use this money on demand like this, and the people who
    supply the cash reap the benefits.

    In a nutshell, banks like direct deposit so they can use your
    payroll money before you have a chance to get to it.  The added
    bonus is the bank also does not have to push a lot of paper to
    make a deposit of your paycheck.  This is why the bank will
    usually waive the service charges on your account if you have
    direct deposit (the bank is making a killing with your money and
    you can't get to it fast enough to stop them!)  I guess if all 500
    or so depositors at XYZ Bank decided on Thursday to withdrawl an
    amount equal to their paycheck out of the bank, it would throw a
    wrench in the bank's investing strategy.

re: .11

>    the required reserve ratio).  This "excess" cash is thrown onto
>    the world market, and if the bank is savvy enough, the money
>    follows the daylight (moving west through lots of time zones)
>    eventually making it back to the orginating institution with a few
>    bucks added in interest.  What kind of investments are made?  Take
>    your pick.  I would think most of them are placed into money
>    markets, where a company desires a short term loan (any from a
>    couple of hours to a day or two) to make a payroll or something
>    similar.  As you would expect, the company pays dearly in interest
>    and fees to use this money on demand like this, and the people who
>    supply the cash reap the benefits.

	I know about the loaning of excess cash, but I  didn't  think  it
	was  generally  used  for  making commercial loans.  I checked my
	handy-dandy old college macro economics text, and  it  gives  the
	following scenario...

	Banks, and I would presume CUs and S&L's, usually get on the wire
	late  in the day and loan out their excess cash (not cash held in
	the bank, but excess cash on deposit with  the  federal  reserve,
	since  the combination of cash in reserve and cash on hand counts
	towards determining the amount of reserve cash the  bank  has  to
	have)  to  other financial institutions that need overnight loans
	to keep their ratios and reserves straight.

	Are you sure that excess funds are loaned out on  single  day  or
	overnight   basis   to  non-banks?   Just  asking,  because  it's
	something I've never heard about before.

Inquisitively,
/Chris

Banks also like direct deposit cause if you don't pay up on your
visa etc they can just collect WITHOUT a judgement...

re: .13

Only if your charge card agreement gives them the "right of offset" (I think
that is the proper term).

Bob

    
    From yesterdays pay stub:
    
    "To pay check recipients:  Please note that direct deposit is less
    costly and more efficient for the company.  Please consider enrolling
    today!  Thank you."
    
    
    Looks like it's good for everybody.