What is a prenote direct deposit?

A prenote direct deposit is a process that allows employers or financial institutions to test the validity of a direct deposit account before sending actual deposits.

During a prenote direct deposit, a small "test" deposit is made into the designated account to ensure that the account information provided is accurate and that there are no errors in processing the deposit. This test deposit typically ranges from a few cents to a few dollars and is usually reversed once the account is verified.

The purpose of a prenote direct deposit is to prevent any potential issues, such as incorrect account numbers or routing numbers, from causing problems with the actual direct deposit transactions. It helps to ensure that employees receive their paychecks or other payments on time and that the funds are deposited into the correct accounts.

Prenote direct deposits are typically initiated a few days before the first actual direct deposit is scheduled to take place. Once the account is successfully verified through the prenote process, the employer or financial institution can proceed with sending direct deposits for future pay periods.