US Treasury Requires Direct Deposit for Veterans Benefits

The US Treasury announced they are requiring direct deposit for veterans benefits and other federal benefits payments. If you or someone in your family receive a check from the Federal government for benefits payments, that individual is required to switch to a form of electronic payment by March 1, 2013. This change applies to a wide array of benefits programs, including veterans benefits, Social Security benefits, Supplemental Security Income (SSI), Railroad Retirement Board, Department of Labor (Black Lung) and Office of Personnel Management benefit checks. If you have been receiving checks from the government for a long time a change might be confusing. But switching over is fairly simple.

Why is the U.S. Treasury Requiring Electronic Federal Benefit Payments?

direct deposit for veterans benefitsAfter the government has been sending out checks for years, why are they forcing everyone to switch to electronic payments now? There are four reasons:

  • Financial Crime. Stolen checks or fraudulent claims have always been a problem for the government’s massive programs. There are millions of people receiving government benefits checks each month. This can equate to millions of dollars in lost funds, even if just a small percentage of transactions are fraudulent or result in financial crime.
  • Immediate Access. Offering recipients direct deposit or a prepaid debit card means recipients will have immediate access to their funds. They won’t have to wait for the mail service to bring an envelope, then take a separate trip to a bank to cash or deposit the check. The money will be available on time, every month.
  • Easier Problem Resolution. If a problem occurs with a check it is a lot harder to track down where the problem occurred with a paper check. Was it lost in the mail or is it just late in being delivered? With electronic payment it will be a lot easier to track down any problems that do occur.
  • Cost Savings. When the government sends out millions upon millions of benefit payment checks each year they have to print the check on paper, put it in a paper envelope, and pay postage on it. All of those things are cost overheads to running the program. With electronic payment you still have some overhead, but you’re not wasting money on ink, paper, and delivery.

What are the Electronic Payment Options?

You have two options to select from:

  • Direct Deposit. You can have funds directly deposited into your bank account just like you would with a paycheck if you were employed.
  • Direct Express® Prepaid Debit Card. If you don’t have a bank account, the government will send you a prepaid debit card that will have your funds placed on it each month.

How Will I Know My Money Has Been Deposited?

A common question you might have is how will you know that your Federal benefits money has been deposited. That depends on which method you select to get your deposit.

With direct deposit you can:





  • Call your bank to verify the deposit has gone through
  • Check your bank’s online website to see if the deposit has gone through
  • Go to your bank in person to speak with someone that can look up your account information for you

With the prepaid debit card option you can:

  • Receive free text messages to alert you that the deposit has posted to your debit card
  • Receive an email alerting you that the deposit has posted to the debit card
  • Call US Direct Express at 1-888-741-1115 to listen to an automated message that will confirm whether or not your deposit has posted

How Does Direct Deposit Work?

Direct deposit is like having the government send a check directly to your bank on your behalf. It saves you from having to wait on it to be delivered and then driving to your bank to deposit the check. Instead of mailing you the check, the deposit amount is transferred electronically to your bank and directly into your bank account. Many employed individuals receive their paychecks each month via direct deposit, and the concept is exactly the same here. Your personal information is never transmitted or at risk; your bank gets a notification to deposit X funds in Y account number and then does so.

Are Electronic Payments Safe?

Electronic payments are actually more safe and secure than paper checks. Paper checks can be stolen, lost, delivered to the wrong address, and copied. With an electronic payment the funds are immediately available in your bank account (if you selected direct deposit) or on your prepaid debit card (if you select the Direct Express® card option) on the payment day each month. You don’t have to worry about something happening to the check in between the government mailing it out and when you deposit or cash it at your bank.

How does the Direct Express® card work?

Direct Express prepaid debit cardThe Direct Express® card is a Prepaid Debit Card. Each month your payment can go directly onto the card; it is like having a bank account without having to open an account somewhere. Your balance and account information are accessible online or via automated phone message. You use the card just like you would with any other debit card. The only problem you might run into is if you want to get cash off of the card. You would have to either get cash back at a store or a pay an ATM fee. (If you select direct deposit into your bank account, you could go to a teller to withdraw cash from your account. That is not an option with the Direct Express® card because there is no bank branch to visit.)

How Do I Make My Electronic Payment Selection?

Making your selection is easy. You can:

You will need to have some information handy based on which selection you are making.

If you are choosing direct deposit, you need a few things. You may find it helpful to grab a copy of your most recent check from the US Treasury. It should look like this:




US Treasury Check Number

You will need a copy of your US Treasury check to change to direct deposit.

You will also need:

  • Social Security number or claim number
  • 12-digit federal benefit check number
  • Amount of most recent federal benefit check
  • Financial institution’s routing transit number (can be found on your check or by calling your bank)
  • Account number and type – checking or savings. The following image shows where you can get the information from your bank account:

Bank routing number and checking account number

If you are choosing the Direct Express® Prepaid Debit Card, you need:

  • 12-digit federal benefit check number
  • Amount of most recent federal benefit check

Note about TSP withdrawals: This only applies to payments from the U.S. Treasury. This does not apply to TSP participants at this time. You will continue to receive TSP payments as you are currently receiving them.

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Date published: January 15, 2013.

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Kevin is a debt reduction champion with a passion for teaching people how to budget and build wealth for retirement. He’s building a personal finance freelance writing career and has written for RothIRA.com, Good Financial Cents, Moolanomy, and many others.

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