Laid Off? Get Ready To Pay Bank Fees On Your "Unemployment Debit Card"
The Associate Press says that 30 states have cut deals with bailed out banks like JP Morgan Chase, Citigroup, and Bank of America to distribute unemployment benefits on debit cards instead of paper checks. The catch? All of these programs have fees — and in some states the cards are mandatory.
The AP talked to one recently laid off worker who paid $6 in fees to access $80 of her unemployment money.
"It's a racket. It's a scam," Rachel Davis, a 38-year-old dental technician from St. Louis who was laid off in October, told the AP.
Why are the banks doing this? The programs have the potential to be a huge source of revenue. Bank collect interest on the money before it is withdrawn, transaction fees of 1 to 3 percent whenever the cards are used at a store, ATM fees, fees to speak to a banker, fees to make withdrawals at a branch, and even overdraft fees. Here's the math:
In Missouri, for instance, 94,883 people claimed unemployment benefits through debit cards from Central Bank. Analysts say a recipient uses a card an average of six to 10 times a month. If each cardholder makes three withdrawals at an out-of-network ATM, at a fee of $1.75, the bank would collect nearly $500,000. If half of the cardholders also dial customer service three times in any given week (the first time is free; after that, it's 25 cents a call), the bank's revenue would jump to more than $521,000. That would yield $6.3 million a year.
Here are some more examples of the type of fees charged to users of these cards.
Jobless hit with bank fees on benefits [Yahoo!]
(Photo:The Cornballer)
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Comments:
when i got the card in the mail I hard three separate papers telling me what the fees are. Just take all the money out at once.
It's unconscienable.
I have hard time believing that the cost of printing a check and dropping it into the mail is more than the cost of printing a card, mailing it, maintaining the IT infrastructure and transmitting transactions are any less. Nor do I think it's any less than an ETF from the government to a checking/savings account.
While you can withdraw all your money for free, that's not the intent. The companies running these programs are hoping that they don't, or don't know they can and thus profit off the backs of people who need every damned penny they can find. That I think is the objection to some very questionable morals/business intent.
This is outFUCKinrageous !
In my state banks cannot charge you any fee for giving you a cash advance on your unemployment debit card.
Also, you can probably avoid transaction fees by heading to any grocery store that accepts debit cards, buying something you'd purchase anyway and getting cash back.
What about residual money...small amounts that aren't withdrawn? Even 72 cents per card can add up quickly.
My home state, Missouri, currently uses a system called the "Missouri Access MasterCard". The card is issued through "Central Bank" of Jefferson City, MO. These are the fees associated with the card:
ATM Withdrawal or Balance Inquiry at Central Bank or Allpoint locations, Bank Teller Withdrawal, Purchase POS - Free
ATM Cash Withdrawal at Other Locations - $1.75
ATM International Cash Withdrawal - $3.00
ATM Balance Inquiry at Other Locations - $0.50
ATM Balance Inquiry International - $1.00
Electronic Withdrawal (ACH) to Checking Account - $2.50
Automatic Voice Response Unit (first usage per week is free) - $0.25/call
Replacement Card (first replacement per year is free) - $5.00
ATM/Purchase Decline - $0.25
Inactivity (180+ days with no purchase/withdrawal/purchase activity) - $1.50
Notification of deposits to the card are only available by cellular phone SMS (text) messaging. There is no email notification option. Cellular telephone companies charge usage fees for SMS messages.
As an added bonus, there is a binding arbitration clause which requires all card related arbitration to take place in Jefferson City, MO.
This PDF has all the fine print goodness associated with the card: [www.fsvsecurecard.com]
@RandomHookup: That would be an issue at the end, but they are only distributing one card, and then reloading it each week.
I got one of these from the state of Texas when I was out of work in 2007. They allow at least one free withdrawal per deposit, so I just pulled my cash out and put it right into my regular account at another bank.
It's not without hassle (I confess to some grumbling on my part), but it might actually be faster for people to get their hands on money than if they were sent an actual check.
in ny state you can pick direct deposit instead of the debit card.
go for the DDeposit!
Why wouldn't you just do direct deposit like the article says is an option? What is wrong with people.
Does anyone have a list of which states mandate these carnie-cards so I can deliver swift kicks in the ass to my reps if they let it happen?
As far as I know, anywhere these cards are used, you can opt for direct deposit. The cards are used if you decide not to do so.
@valen:
I live here too. If I lose my job, I'm going straight to McDonalds. At least I'll have an actual paycheck while I look.
Screw this crap. Fees and scams are too rampant. This is beyond ridiculous.
AS soon as money gets placed in your account, withdraw all of it. One fee you get all your money.
Welcome to capitalism, where anyone can get rich- on the backs of your fellow man, of course.
I see Delaware's influence here.
@zentec: If this wasn;t cost effective the banks and govt's wouldn;t engage int he practice. The banks are mnaking their duckets on the merchant interchnage fees. I susopect that this allows them to price the cards below cost or the cards and the checks.
As for the fees, you can clearly ignore them by not ebing on the phone with customer service every second and by giving up some flexibiltiy in the withdraling of your cash. No different than the cost with getting your cash from an ATM out of network.
Keep in mind that paper checks are much less flexible than plastic. You can't walk up to any atm with a check and get cash even if you were willing to play the fee. You have to go to the issuing bank or you own assuming you have one. And since not everyone has a checking savings account the eft idea doesn't work. Don't want or need the flexibiity you won't incur the charge.
Literally just had to fill out a form today for the first time and was surprised to see the Debit Card notice... (Texas) Didn't even consider there were fees. Just thought of the inconvenience of getting the money into the bank to pay bills.
Arizona uses a card issued through Chase to distribute unemployment compensation, but there aren't any fees if you hand over the card and ask the teller at Chase to withdraw your money from the account. However, they do want you to know the total available funds.
Banks are struggling like everyone else today. Why deny them income sources? They are providing a service, even some might say a convenience. Let's not get all knee-jerk "banks are evil" here, OK?
My husband has one of these debit cards. They are mandatory in Indiana for unemployment. You can do a direct deposit option, but it has to be deposited onto the card first, then you can transfer into your personal checking account. This does take two days to process. Or you can just go into a branch and withdraw all the money at a teller for free.
In NC, you use the card at least until your direct deposit is processed (if you choose that option). Free withdrawals at Wachovia branches and no fees if you get cash back at point of purchase. I don't see this as a big deal because it saves NC money to use the cards instead of cutting/mailing checks every week. It also gets the money to the unemployed folks (like my spouse) much faster. Now it's saving the US taxpayers money, because NC's unemployment fund ran dry and the state borrowed a jillion dollars to cover this week's payments. The state expects to keep borrowing weekly for a while.
These cards aren't really new, either, but there are lots of newbie unemployed who've never encountered them before.
@trellis23: You'd be surprised how many people don't have banks and use currency exchanges. There's a reason those things are on every block of a major city (esp. poorer areas). The problem is that it creates a cycle of sorts. Paying all those fees makes it harder for them to save to open an actual account. It's even harder with banks imposing all sorts of fees for low balances, returned checks, etc. So it makes it that much harder to save money, get out of debt, etc.
I have no problem with these if there's an option between Direct Deposit and this. Getting your check cashed at a local currency exchange might cost even more than the fees. I think some C-E's charge 3%. So 3% of $1000 is $30. All these fees suck, but less than the alternative.
I haven't used a checking account in six months.
@Brad Levy: How did you manage to take out all of your money at once? I receive a WEEKLY unemployment payment, which means I'd have to take money out four times. In Nevada, unemployment is handled via Wells Fargo. You can withdraw from a Wells Fargo ATM twice a month for free, I believe. I have bills to pay so I have to take the money out and put it into my bank account. It's very upsetting that bailed out banks are again exploiting consumers.
@bellesouth: I tried going the cash advance route and the bank gave me such a hard time. "we can't do that.""we don't offer that service." etc. etc. when they DO OFFER IT. It's a fight every week unless I can get there every time the same teller or manager is on duty.
What do you do, then? Just curious!
"..baled out banks.."? Maybe I'm wrong, but shouldn't that be "bailed"?
how is this any different than people getting the checks and going to a check cashing place and having to pay fees?
Because unemployed people used to do that all the time.
And they wonder why people blow up government buildings???
If you receive a check, you have the option to keep 100% of your money and just deposit it in your bank account. You're not forced to use a check cashing service. Not everyone on unemployment uses check cashing services. In fact, I bet it's a minority by far.
I would sue the State government in a class action lawsuit over this. If they require you to use these cards and fees are assessed, they are forcing you to give up part of your money. That is not legal or just.
Huge money saver??? For who?! The State! They're essentially passing their costs onto you. Fuck that shit. We already pay taxes to the state. We all know how wickedly inefficient governments are with money. Don't tel me the state cannot afford to print checks. They already have the damn machines and paper to do it. Direct deposit would be fine. Don't require me to pay your fees.
This is insane. How in the world is mainstream media not all over this one?? They're being paid off too to keep quiet??? This fucking country is finished!! Seriously, this country is over. No more America. It's officially fucked for life.
The banks are NOT struggling and definitely NOT like everyone else. FUCK YOU to high hell for even suggesting that they are. They are making TONS of money and just got a free bonus check (a.k.a. George W Bush Bailout). They do not need to make more ridiculous amounts of money by order of state governments. They are making so much money that they are still paying their executives millions upon millions in salaries, bonuses, and stock options.
You know who's struggling these days? School teachers, students, office workers (who happen to be producing massive incomes for companies like banks that then try to fuck them over by playing games and attaching exorbitant fees), and everyone else trying to make ends meet.
Banks are not inherently evil, but this running up of the fees and all of the creative fees they've come up with lately is evil and these banks need to be stopped immediately.
Wow, it's seriously time for a major uprising in America. People, wake the hell up before your country is gone. It's coming fast.
The only way I think the d-bags in state legislatures will listen is if a TON of unemployed people marched onto the capital grounds and had a ceremony of cutting up the cards and tossing them in the grass.
@chiieddy: In Texas you do not have an option. However, you get one withdrawal per 2 weeks free, and you can use your card at point of sale for free, so you can get cashback. Still, I wish I had the option because direct deposit would be better, but I am grateful for the money because times are tough.
@Marshfield:
Wow. I don't even know how to start on a reply to your post.
The sub-prime mortgage business is also struggling, lets make it a law that anybody going for a mortgage has to get a sub-prime mortgage.
American car makers are also struggling. Lets make a law saying that anyone buying a new car has to buy from one of the Big Three.
Did you ever notice how over the years, if you were going to almost be late with a bank/credit card payment
the charge to do a payment by phone closely followed the cost of next day express mail delivery?
Their thinking was since it costs almost the same whether I mail it or phone it in, I will pay by phone and save the trip to the post office. Since when has the price of computing power gone up over the years?
They will do anything and everything in their power to nickel and dime (I'm sorry, Dollar and multi-Dollar) you to death. Since when does it cost $15.00 for a computer to process a phone payment? These Damn bank card are just one more way to stick it to hard working people. PERIOD!!!!
@Marshfield:
Who is struggling?
In 2005, an average Chief Executive Officer (CEO) was paid 821 times as much as a minimum wage earner, who earns just $5.15 per hour. An average CEO earns more before lunchtime on the very first day of work in the year than a minimum wage worker earns all year.
United Airlines CEO Glenn Tilton received $39.7 million in 2006. Tilton's 2006 compensation exceeded the airline's entire annual profit of $25 million reported by United's parent company UAL, Inc.
States are on a new test program to save money, decrease fraud and speed up benifits. They are using a microchip implant that operates like an ATM or credit card. it goes in your right hand. You get an extra five bucks a month in california if you use it.
I have one in Indiana, I just use it as a credit card - no fees.
@yso:
Yeah, that simply is the way to go. There is something wrong altogether if you don't have a bank account this day in age. Some people like me even have multiple just in case.
@sumgai: But as others have mentioned, in most states there _are_ ways to get money out of these cards without fees, you just have to be really careful and read the documentation closely to make sure you use the right method.
@fatcop: someone not fat. and someone that had nothing to do with how the states implement this program. but i guess making stupid statements is more fun?
It's also a huge money saver to the programs, which is why states are doing it... While I do have sympathy for those incurring excess fees, the setup is usually structured so that you CAN get your money out without paying anything - you just have to get it out the "right" way. My question would be if any of the money that the state/program saves is increasing the total amount of aid available.