Research snapshot
Federal beneficiaries who choose direct deposit are significantly less likely to have a problem
with their payment than those who get checks. Yet the growth rate of direct deposit is down
sharply.
Seeking to address this challenge before the first wave of baby boomers reach retirement age
in 2008, the U.S. Department of the Treasury commissioned the study, "Understanding the Dependence
on Paper Checks," which revealed check recipients' reluctance to adopt direct deposit.
Following is a results summary of the study.
Four primary barriers prevent federal benefit check recipients from switching to direct deposit:
- Emotion -- attached to the monthly ritual of the paper check
- Inertia -- receptive to direct deposit, but need motivation
- Information -- lack of an understanding of how direct deposit works
- Mechanics -- lack of bank account
For SSA check recipients, retaining a sense of control is a critical concern;
for Supplemental Security Income (SSI) recipients, the focus is on maintaining their
standard of living.
Overall, one-third of respondents were inclined to switch to direct deposit; 28 percent of
Social Security and 40 percent of SSI check recipients said they are "likely" to sign up for
direct deposit in the future. Those most resistant to direct deposit were more likely to be
Social Security recipients, older, retired, Caucasian, male and have been receiving benefits
for a longer period of time.
Direct deposit recipients felt very strongly about several key benefits of direct deposit:
- It's safe -- 94 percent
- It's convenient for me -- 93 percent
- It's easier to pay my bills -- 83 percent
- I know when the money is in my account -- 83 percent
- My money is available sooner -- 82 percent
Sixty-eight percent of SSI and 27 percent of Social Security check recipients do not have
bank accounts; extrapolating this data into the larger population of federal beneficiaries,
this equates to approximately 4.5 million unbanked check recipients. Despite the high percentages
of unbanked check recipients, 81 percent of Social Security and 50 percent of SSI check recipients
go to a local bank or credit union to cash their checks.
About the WirthlinWorldwide research methodology
- The research was initiated in late 2003 and concluded in early 2004
- Qualitative research: 136 in-depth, one-on-one interviews
- Quantitative research: a mail and phone survey with 2,616 check-receiving respondents
and 200 direct deposit respondents
- Margin of error for all key sub-groups is between 2 percent and 6 percent
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