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BANKING ON DIRECT DEPOSIT, FOR SAFETY'S SAKE

While I was in high school, I worked as a teller in a savings and loan association, and though it was 40 years ago, I clearly recall men and women eagerly coming up to the window, checks in hand, to trade them for a stack of $10 and $20 bills.

It was an important transaction, a sign of their week's labors. But, these days, it's a dying tradition.

On Jan. 2, a law goes into effect that will convert most federal payments -- Social Security, veterans benefits, federal paychecks, etc.-- to direct deposit.

Surprisingly, a good number of Social Security recipients already use the option, which has been available for more than 20 years. As of last month, 72 percent of Social Security recipients were signed on, according to the Treasury Department.

Shirley Marx, director of the Clarence Senior Citizen Center, said that they constantly remind members that direct deposit is safer. Next month, in fact, that center is starting a program called Money Matters that will be kicked off with the topic of direct deposit.

Some people, though, cling to the old ways, recalling the days when they walked to hometown banks and then paid their bills in cash.

"Back then you could do it that way," Ms. Marx said. But in 1998, as we all know, we do what we need to do to be safe.

Donald Hammond, acting fiscal assistant secretary for the Treasury Department, said direct deposit is not only safer, it's simpler.

Money is available on the payment day, as soon as the bank opens, he explains.

"You don't have to wait for the mail or go to the bank or make a deposit," he said.

He also points out that it's easier to fix a problem associated with direct deposit than to reissue a check. "With direct deposit, a correction can be done within 48 hours while a misdirected check can take 2 1/2 weeks," said Hammond, who was interviewed by phone from Washington, D.C.

People who haven't used the system may be leery of it, but Hammond says problems are 20 times more likely to occur with paper checks than with the electronic transfers. Each year, the Treasury Department replaces more than 800,000 checks that have been lost, stolen or damaged, as well as $65 million in those that were forged, counterfeited or altered.

For the approximately 10 million recipients who don't have checking accounts, plans are in the works to offer a low-cost electronic transfer account in financial institutions around the country.

Still, people who prefer to receive a check can continue to do so, said Hammond. He points out that there may be reasons that make the paper check preferable, such as a disability, language or literacy barriers or living too great a distance from a bank. Some people may simply not want to change.

"People who don't want to do this don't have to," said Hammond.

Those who do can contact Social Security, or, even easier, request automated enrollment at their bank.

I think direct deposit makes sense. It's not as satisfying as trading in a check for cash. But in today's world, anyone who looks out for an older person should urge them to make this switch.

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