My Employer Will Only Pay Me By Prepaid Debit Card. Is That OK?

Everyone (except consumer advocates like us) seems to love prepaid debit cards. You can get student loan fundage on them, unemployment benefits, and even federal and state tax refunds. And now they’re handling your paycheck. Christopher just took a job as a pizza delivery driver for a major chain, and he has only one option for receiving his pay (other than tips): a prepaid debit card. He doesn’t like it.

I just started my first day on the job as a delivery driver for a major food delivery chain. They told me today I had to fill out a form to receive my hourly wages on a prepaid debit card through a financial institution I’ve never heard of.

Ever since I was in high school, I’ve used the same bank for everything (the best bank in the world) for absolutely everything. To this day I remember thinking, “Which bank do I want to trust with my money and my personal information?” And I’m still with that bank today, and avoid doing business with any others unless I have no alternative.

Only a small portion of my overall income from this job will be issued on the debit card, most will be made in tips. The store is telling me there are no fees associated with using the debit card. That strikes me as a little hard to believe, but even if that’s true, I’m still being put in a situation where I have to entrust a financial institution with my personal information. And I’m adding an extra unnecessary step.

A quick google brought me to a web forum where a parent was complaining how her 16 year old son (also a delivery driver) went to withdraw $100 from a prepaid debit card after being paid on it, never received the money, yet his account showed the funds had been withdrawn.

I asked the manager if they could do direct deposit, however the answer from the payroll department is that the prepaid debit card is the only option.

This sounds unethical to me. Is it legal? Is there anything I can do if I don’t want to sign up with this other bank, short of refusing the job offer? I feel like it’s perfectly reasonable of me to want to decide who has access to my personal information, an employer is one of those, but a bank is something I should have final say in. Or am I overreacting?

Our fellow watchdogs down the hall at Consumers Union worked with the National Consumer Law Center and industry group the Electronic Payroll Coalition to draw up some core principles for paying employees by card. First on their list: employees should be given a choice, and still have the option to use direct deposit or a check. Even if payroll is 100% electronic, they should offer an option for regular banks.

For Christopher, the solution is obvious: if there are really are no fees, visit an ATM every payday, round down to the nearest $20, take out his cash, and deposit it in his beloved bank.

Prepaid Debit Cards Are Money Sucking Black Holes In Your Pocket


Edit Your Comment

  1. humphrmi says:

    I’m not sure that your solution is quite so obvious, given that the OP’s concerns are really around some unknown bank having his personal information. You are required to give some of that information to your employer in the normal course of working for them. But being required to give such information to a third party sounds sketchy. However, that said, I don’t know if it’s legal or not.

    • sumocat says:

      The employer’s bank was going to get his personal information either way. Unless it’s a mom and pop store that cuts you a check directly, the big chains go through some financial institution to issue payroll. They’d need his personal info for paychecks, direct deposit or debit card. The real issue is whether he trusts them to track what he does with it. Draining it for cash is the best way to avoid that.

  2. Blackadar says:

    It’s legal and it’s getting pretty common these days. Sorry, if you don’t like it, don’t take the job.

    • bsteimel says:


    • dolemite says:

      As long as there are absolutely no fees involved, I don’t see a problem.

      • Nigerian prince looking for business partner says:

        That’s my take on it too.

        If there are fees involved, that creates a situation where one’s entire paycheck isn’t redeemable for cash. I’d consider that being paid in scrip.

        Otherwise, I think it’s a reasonable, albeit inconvenient way of being paid.

      • mga1 says:

        I think it’s giving the employer someone to point the finger at when something goes wrong with said cards. When a employee goes to withdraw money on it, and it isn’t there, employer points finger at card/bank, bank points finger at their records showing it being withdrawn, then who can you go to?

        Are those funds on the debit card FDIC insured?

        Do you get the same debit card reloaded, or is it a different card with each “paycheck”? If different card, then the card issuer is hoping people lose them and never withdraw the money.

        • RandomHookup says:

          I’m sure it will be the same card.

          Unlike store bought debit cards, the bank will have the employees’ information and will have to report to the state if any funds are “abandoned”.

        • The Porkchop Express says:

          bingo, the only thing I would be worried about is if it is FDIC insured.

    • Blueskylaw says:

      “Sorry, if you don’t like it, don’t take the job”

      What will you be saying when every company starts doing this in order to take even more money away from the worker before they even got a chance to spend it?

      Them’s the breaks?

      • frank64 says:

        There are no fees attached to the card.

        • Blueskylaw says:

          “There are no fees attached to the card.”

          The cigarette companies also said under oath that smoking wasn’t dangerous. How can the card NOT have fees? Is the company issuing fee free cards because they are feeling generous?
          I wish the OP listed the card company so that we could dig a little deeper into this.

          • Sarek says:

            Yes, but those cigarette execs went to prison for lying under oath, so we’re covered.

            Oh wait…………….

            • Blueskylaw says:

              And the tobacco settlement money also went to help children and people stop smoking and for awareness campaigns. . .ohhh, wait

          • frank64 says:

            It appears at the very least if he uses it like a check by going to his bank and depositing the money, or going to a grocery store and getting cash back at purchase(or some such thing), there is no charge. Maybe IF he used it as a debit card there would be, but that would be his option.

            It is very reasonable for the employer to decide that whatever fees are involved, overall it is the least expensive option, and they pay them. You seem to be hung up on debit cards need to cost more than checks or DD. I don’t think it is so, but even if so, the difference would be small and paid by the employer.

          • RandomHookup says:

            It is likely that the employer pays a fee for the cards (ultimately less than the cost of cutting checks, not sure about DD). It’s almost impossible that there aren’t SOME fees, like ATM withdrawals and such, but it might be they will keep the fees off for a few years before slowly adding them on.

            I was thinking at first about forgotten sums on the cards ending up in the bank’s hands, but they have all the info to report any abandoned amounts to the state if the employee leaves money behind.

          • homehome says:

            A previous employer of mine had the debit card option and I never had fees. And I was able to xfer the funds to my account quickly as well. I understnad him not wanting to do that though, I stopped it eventually as well. But if that’s the only option, then either swallow it or kick up dust (this will have reprecussions)

            • BBBB says:

              A long time ago I got a rebate in a prepaid card and I managed to cash it out at my bank and deposit it into my account. I’m sure the different cards vary on this.

              All other times I received prepaid cards I used the whole balance in one transaction – most grocery stores can handle “split” transactions with the card being emptied and the rest in cash.

        • RandomHookup says:

          For now, but these things always seem to evolve into a costly proposition over time.

        • HomerSimpson says:

          Funny they said that about ATM’s too in the beginning!

      • maxamus2 says:

        Most jobs REQUIRE direct deposit today. Yes, take it or leave it.

      • Applekid ┬──┬ ノ( ã‚œ-゜ノ) says:

        After that’s done, exepect the the money to only be good at Company stores or for settling tax bills.

        Shadowrun is right around the corner.

    • RiverStyX says:

      I’m going to take a wild guess that this reply was written by somebody who doesn’t even have a job.

    • Hibyeman says:

      Death to the op commenter that is Blackadar

    • Blackadar says:

      Obviously, many of you simply are commenting without ever understanding what a payroll card is. It acts just like a debit card. It’s tied to a bank (whoever is the card processor) and guaranteed. They’re usually done with the Visa logo, but I’ve seen MasterCard ones as well. It’s quite common in certain industries – fast food, self-performed construction, major service organizations, staffing, etc. Any type of industry that has a high volume of remote employees, especially in high-turnover industries.

      So to folks like Hiby and River, go educate yourselves instead of drooling on the keyboard.

      • the Persistent Sound of Sensationalism says:

        Sorry, but I either want cash or the choice of which financial institution is holding my money. I don’t care how common it is, it’s wrong to take away the ability of an employee to manage their own finances once they’ve been paid. This is getting too close to “company scrip” and I would not be surprised if the pre-paid card company was owned by one of the fast-food congomerates.

        • frank64 says:

          A debit card such as this is really a modern check. There is very little difference. The banks are not owned by the fast food industry.

          If you show an attitude like that towards a new employer, they might be smart to decide not to hire you. It would mean there are probably going to be other issues in the future. I would want someone with more flexibility and more positive outlook.

          • Thorzdad says:

            You mean someone who smiles and obediently grasps their ankles when told to?

            • frank64 says:

              There is a middle ground to being a patsy and being a narcissistic trouble maker. This is really just a modern check, and I believe the OP just didn’t understand.

              This is not being forced to work 15 hour days with no bathroom breaks. My employer didn’t want to have direct deposit, he paid by check. I didn’t like it, but that was their decision. At work you sometimes have to take account the business needs of the company, reasonableness is the key on both sides. I accept things I don’t like sometimes, especial minor things. People who do get upset about minor things usually are not as successful in work or life.

              • Coleoptera Girl says:

                Can you take your employer-issued card and transfer all of that money into the bank/credit union of your choice? If not, then it most definitely is not a “modern check!”

              • RvLeshrac says:

                It isn’t a “modern check.” A check doesn’t have any fees on it. A check allows you to place the entirety of the value listed on it into your bank account without having to leap through a metric fuckton of hoops.

          • jamar0303 says:

            >modern check

            Uh, no. If I can’t freely convert every last cent into cash or move it into my own bank account, it’s not a “modern check”. An electronic transfer (wire/ACH) is a “modern check”. This… isn’t.

            Here, if an employer pays into a card, it’s a real debit card and associated bank account at a large financial institution with physical branches where you can draw it all out and move it into your own bank account if you prefer. And this is supposed to be a “developing” country… pah!

    • CommonSense(ಠ_ಠ) says:

      This is not common at all.
      Most companies require direct deposit and wont waste their time or money paying for the printing of debit cards.
      A debit card has to be illegal unless they have some bank somewhere they will allow you to remove all your cash from it.
      ATMs only go to $10 which means anything less than $10 you cant get which would make the card illegal.

    • DFManno says:

      It’s not legal in California. By law, employees must be paid in cash, by check, or through direct deposit.

    • daemonaquila says:

      No, unionize and kick your employer’s butt.

      I’m sick to death of the attitude that you can’t fight back, shouldn’t fight back, etc. People don’t have to be corporate victims – unless they allow it. That attitude just is one more thing that puts pressure on people not to act.

      • dyzlexiK says:

        Yes, try and unionize at a minimum wage job and find out how fast you lose your job, as they bring in new minumum wage employees who dont want to unionize.

  3. Blueskylaw says:

    “The store is telling me there are no fees associated with using the debit card”

    The cost of doing direct deposit is essentially zero since it’s done by a computer. The cost of creating and mailing a plastic card is more substantial, so when the store is saying there are no fees with using the debit card my BULLSH*T detector goes straight to DEFCON 4.

    The question is: Why a debit card and not direct deposit?

    • RandomLetters says:

      Sounds like this chain has their payroll contracted out to a third party. In that case the cost of the card is probably built into the cost of doing the payroll.

    • knightracer says:

      Believe it or not, it still costs the employer money for direct deposit.

      • Blueskylaw says:

        That’s true, but the cost of a direct deposit is miniscule
        compared to creating and mailing a physical card.

        • frank64 says:

          The cost of the card is miniscule compared to payroll costs, especially if the same card gets loaded per payroll. Banks charge employers for DD with markups. The difference in costs to the bank are probably small enough that the employer pays the same.

          • uniqueme says:

            Don’t forget the ink, the envelope, cost of postage.Plus the associated non-green effects of mailing a check (transportation, fuel, etc.) and the medium itself (card vs. paper) becomes only a small part of the equation.

            • FatLynn says:

              I don’t think you understand what direct deposit is.

              • frank64 says:

                If he was paid in a check though there would be no discussion. People are hung up that there MUST be fees to the card because debit cards would have a cost. He is pointing out that checks have a costs too. People seem to be exaggerating the costs to debit, and minimizing the alternative costs to make the point that the debit card must be a bad idea. It might sound good, but the reality is there is going to be no material difference in payrolls costs to the company, and probably less for debit cards.

          • BlkSwanPres says:

            My company’s bank charges us nothing for DD.

        • Sarek says:

          It’s mailed only once, then they just reload it, I presume.

      • A.Mercer says:

        Not really. I work for a company doing programming on the HR side. We generate a file from payroll. The program was written years ago and has no extra cost associated with it. The bank accepts the file. They do not charge us to do this. The direct deposit advice forms are online thru our employee self service. We do not print a thing for direct deposit. A couple of minutes of work on our part.

        Compare this to printing out paychecks. Cost to maintain the printer and keep it stocked with ink. Also, this printer is locked away and not allowed to be used for anything else because it has the signature and MICR information stored on it. Cost to buy the paycheck forms. Cost to pay employees to print the checks. This takes hours and takes about 3-4 employees to print the checks and watch the process. Cost to distribute the checks. Most go thru our internal mail system but some get mailed out. Even our internal mail system is not free. The added mail creates a small strain on our small mail office. Small cost but that is still a cost. If it goes thru the U.S. mail then there is postage. It does not end there. Cost when an employee loses a check. We now have to spend time and money to issue a stop payment (which we do not pass back to the employee but sometimes I think we should). We need to print a special check. Only a few minutes of work but we used to get one or two of these a day sometimes.

        And all of this is when there were no problems. Printer jams or complete failures happened sometimes. Lose half a day because the printer broke down and the bosses did not listen when we told them we needed to keep a backup printer on hand. I know, there are times when the web server has a glitch and we lose our online system but so far the SAN and its backups have been good to us so we have never lost the ability to generate the file and send it to the bank. We saved a lot of money and hours by converting to direct deposit.

        That said, I do not know why this pizza place refuses to allow this person to do direct deposit. The only thing I can think of is that this bank and the company have an “arrangement” and that arrangement is not in the employee’s favor. There could be hidden fees or penalties or something that will be used to snare the guy’s money.

      • kc2idf says:

        Yep, and it also costs the company money to print checks. It is part of the cost of doing business.

    • c_c says:

      If the same financial institution that issues the debit card is also the one contracted to do the pizza place’s payroll, then they likely cut them a deal on the card because it keeps the money in their bank.

    • LuckyLady says:

      There are a lot of people who don’t have bank accounts and therefore can’t take a direct deposit. That’s probably why this company opted to issue pay via prepaid debit cards.

    • notserpmh says:

      I think what everyone is missing here is merchant fees. Banks offer this to companies for payroll for the same reason they offer free Visa/Mastercard check cards on personal accounts for free. There is no fee to the OP, but if instead of just pulling all the money out and putting it in another account, he uses it to buy groceries, buy gas, etc. then each time the bank (and Visa/Mastercard depending on if it is credit or debit) will get a fee from the merchant for his use. If they printed a check and then he writes checks or uses cash, the bank loses out on that fee.

  4. VicMatson says:

    Try paying the rent with one!

  5. Mad Monk says:

    My company offers direct deposit but for those who don’t have a checking account the offer the pre paid debit card. Our company strives to be Green and pre paid cards are one way to do this. We still print checks but as time progresses we will see more companies going this route.

    The plus are you don’t have to go to the bank minus is you don’t know have much you have on the card.

    • FatLynn says:

      This makes sense, especially when you consider that some companies only offer direct deposit. A pre-paid debit card offers employees MORE options, not fewer.

      That said, anyone who can be employed in the US can also open a checking account, so it would be nice of the company to work with their employees on financial literacy.

      • Nigerian prince looking for business partner says:

        It’s possible to be employed and have derogatory lines on your ChexSystems report.

        • FatLynn says:

          Sorry, I meant savings account. Virtually anyone with a SSN can get a savings account of some type.

          • SmokeyBacon says:

            This is great if your employer will do a direct deposit to a savings accout, but mine will not do direct deposit of expense checks to savings. We had an employee who couldn’t get a checking account but had a savings account and the company told him it was against company policy to allow direct depost of expenses to savings, so he always had to be issued live checks. We are now going to direct deposit only for expenses so I am very curious what would have happened if he still worked here.

    • RandomLetters says:

      In what way is a plastic card greener than a direct deposit?

      • Anathema777 says:

        It’s not. That’s why the poster said that the prepaid debit cards are an alternative for those who don’t want direct deposit. The cards are a greener option than paper checks.

        • RandomLetters says:

          I can’t even see that as being greener. Paper is a renewable resource that’s biodegradable and recyclable. Plastic is recyclable but not biodegradable.

          • Anathema777 says:

            Yeah, but the cards are reloadable. So if you have 100 employees, you’d need maybe 125 cards (an extra 25 in case some folks lose theirs) and you could reuse them. With checks, you’d need to keep printing new ones every pay cycle.

            • RandomLetters says:

              Honestly I think it could go either way with paper vs plastic. A real study would have to be done to determine which is more environmentally friendly.

            • iesika says:

              Except this is a pizza place. Turnover is going to be high. They probably cut a number of cards every year at least equal to the current number of employees, if not higher.

              (Yes, I know some people deliver pizzas for a long time. Most employees are there for the short term, though. Pizza delivery is a job, not a career.)

  6. anime_runs_my_life says:

    If the prepaid debit card is anything like what our work uses, he should be able to go into any branch and withdraw the entire amount as a cash advance. Double check to make sure there are no fees associated with this. I’ve had to do this twice working at the company I’m with due to changing banks and the direct deposit couldn’t be cancelled (too close to payday). Both times, I went into the credit union I was using and asked for a cash advance for the exact amount of my pay, then deposited it into my checking account.

    • SmokeyBacon says:

      Now, do you have to go to a branch of the bank that issues the card, or can you use any bank anywhere (or your own bank)? If you have to use a bank that issues the card that could make it difficult if there isn’t one near where you live.

    • Thorzdad says:

      Why would it be considered a cash advance for cashing-out the card? It shouldn’t be any different than cashing a check, since it is, de-facto, a paycheck.

      • lolwat says:

        It’s a debit card and technically attached to a bank account. It’s not like a paycheck. There are fees associated with having the account, just like any bank account.

  7. Nigerian prince looking for business partner says:

    Depending on what state he lives in, there might be laws against being paid in “scrip or similar medium” with very strict guidelines on how pay can be issued.

  8. mikedt says:

    No fees. Right. But if you lose the card with a balance on it, or you let a card go “stale” I bet the employer and the card issuing company splits the leftover money. A company never does anything that doesn’t beef up their bottom line or puts a bonus in an exec’s pocket.

    • frank64 says:

      Same could happen if he lost a check.

      • mikedt says:

        Ah, but a check doesn’t get carried around until its “balance” is used up. And most people don’t let a long time elapse between receiving their paycheck and cashing/depositing it – decreasing the chance of losing it. Prepaid cards also have a habit of getting used up till a few bucks are left and then left to rot in the corner of a desk or wallet (I’m guilty of that myself, there’s a wawa card at home with 35 cents on it). That short and very long term float adds up.

        • frank64 says:

          IF he uses it like a check and brought it to his bank, it would all be deposited into his account, so there is no difference. IF he used it like a debit, that would be his option.

          • SmokeyBacon says:

            Is that actually a legitimate option, taking it to the bank and depositing it like a check? I haven’t heard of doing that before with a prepaid card, so I really am curious on this.

            • frank64 says:

              A few people here who have been paid with debit cards have posted it is. I would be real, real surprised if it wasn’t an option.

              • RvLeshrac says:

                The vast majority of pre-paid debit cards do *NOT* have cash access available. It is impossible to obtain the money except through a funds transfer, which may be subject to fees from both the originating and receiving banks.

            • psm321 says:

              I did that with the unemployment debit card before I got set up for direct deposit. Card was by chase. Went to PNC (or maybe it was still National City back then), did a cash advance for the amount and deposited into my checking account. No fees.

        • RandomHookup says:

          One difference — since these are connected to a bank account, the bank knows who the person is and will have to report any leftover amounts to the state. There’s not much advantage to having these folks “forget” their money (unlike the average gift card that has no personal info on file with the issuer).

      • RandomLetters says:

        But he doesn’t want a check. He wants direct deposit. Money in a regular bank account doesn’t go “stale”. And if he lost his check he calls his employers payroll department. They cancel that check and issue him a new one. They don’t get to keep his money.

        • frank64 says:

          They don’t offer it. I had the same problem where I worked. They didn’t do direct deposit .I didn’t like it one bit. It just how it is. You really can’t go demanding the place you work pays you in the exact way that you want. His focus is on the negatives of the debit card and they are largely wrong.

          If you read his letter, he is more hung up on the debit card, he did ask for direct deposit, but his qualms seem to be more about the negatives of the debit card. That is what we are commenting on.

          • frank64 says:

            As to your other point about losing a check. Losing a payroll debit card will have the same protection.

  9. shepd says:

    Nothing like getting your pay rounded down to the nearest $20 when you’re already making below minimum wage!

    I’d look for work elsewhere.

    • StarKillerX says:

      Yeah, I would suggest instead of that they OP go to his bank each week and have the cash transfered off his card into his account.

      Yeah, it’s a hassle and he shouldn’t have to do so, but this is the simpliest way of dealing with the current situation while seeing if you can force the employer to use direct deposit to your account.

      • frank64 says:

        Consumerist sometimes likes to make the story sound more outrageous than it actually is. The $20 was just if he went to an ATM, which was really just an additional option if he decided not to use it as a check.

        If he received DD he would have had the same problem if he wanted to cash out his whole paycheck with an ATM.

        • shepd says:

          Nothing like cheque cashing fees when you are broke…

          • amuro98 says:

            There ARE no check fees for direct deposit because there is no check.

            In reality the OP’s company is doing direct deposit…just to a separate bank that issues everyone a debit card.

            • shepd says:

              That’s what I figured. At least for me, I pay to get money transferred from that account to mine, whereas I pay nothing if it goes directly into my account. But I am Canadian, perhaps in the US it’s free. Beats me. I’ll let you guys win, you know more. :)

          • frank64 says:

            No check cashing fees involved.

            I am not sure if you misunderstood this but, the $20 is the minimum many banks will give, so anything below it would need to stay in your account. This is true for any ATM transaction though, and it does not apply here because the card to always be used like a check and cashed or deposited into one’s account.

            • shepd says:

              Alright, so colour me stupid, how does the money you can’t withdraw via ATM go from being in that card, to being in your bank account, which isn’t that card’s bank? And you wouldn’t be charged fees (by your own bank) for doing that?

              • frank64 says:

                You just bring it to the bank and it is cashed like a check or deposited. No fees, unless you have a bank like BOA that charges for checks too(kidding, I think).

                There might be a way you can do an online transfer depending on your bank and the bank of the debit card.

                • frank64 says:

                  I also meant the OP’s bank. Not the debit card bank, but that might work too.

                  He might be able to make a one time store purchase plus cash back to clear it out. A pack gum and the rest cash back. He gets most of his money in tips, so this is a small amount.

                  There won’t be any charge if he uses it like one would a paycheck, and if he thinks there is a more convenient way there might be a fee, but that option probably wouldn’t even be available to him if it was a check, so he hasn’t lost anything just gained an option, though overpriced.

  10. sp4rxx says:

    That’s a whole lot of work just to get paid …. I would either take it up with the BBB or find another job. It sounds like the employer is cutting costs on printing checks and is cutting to close to the mark.

    Find another job as soon as you can.

    • frank64 says:

      I think the real solution is going to equal about the same inconvenience of cashing a check.

      The personal info on the card is minimal, much less than what a payroll service has, or the indviduasls dong his payroll at the company. If he had direct deposit, it would actually mean his employer would have all his banking info. Now they don’t. His hangups are unfounded.

  11. CrazyEyed says:

    I think the OP is overreacting a bit considering his primary concern is personal information.

    Financial institutions – moreso than just about any other business – are bound by all kinds of privacy laws. The OP’s personal data could be compromised/uncompromised as much as the current institution he banks with. Now if this card had fees to withdrawl money, then it would be a completely different story. But aside from the inconvenience of an extra step to get his money into his own personal account, I don’t understand the paranoia with personal information.

    • Lyn Torden says:

      Actually, there’s no reason the pre-paid card company even needs his personal information. It can physically just be operated as a cash card.

      There is valid reason to be concerned with the personal information. It’s yet another company, a sleazy one in this case, where personal information can leak out to people that would mis-use it.

      • Rachacha says:

        except if the company in addition to handling the pre paid cards is also handling payroll and tax forms. If the company is handling tax related issues, they will need his personal information.

        • StarKillerX says:

          But if that bank is handling the companies payroll services, in addition to the debit cards, then they would be handling the direct deposit so they would not only have all the financial information from his employer but also the information on the account that he is putting the direct deposit in.

      • RandomLetters says:

        The payroll company needs his personal information to calculate all the withholdings from his check. Then they will have a prepaid card made for him or add the funds to a card they have previously made for him. The company issueing the card won’t get anything but a name and a dollar amount.

      • Rachacha says:

        except if the company in addition to handling the pre paid cards is also handling payroll and tax forms. If the company is handling tax related issues, they will need his personal information.

  12. SiddhimaAmythaon says:

    i am sorry but there has to be a way to get the money ALL out. check with the Prepaid co. CA unemployment is on a prepaid card but if you login to there website you can setup an automatic ACH to another bank as soon as any money is loaded onto card. a bit delayed buy its direct deposit.

    • lolwat says:

      Cash advance at any bank will allow you to pull off the entire paycheck at once unless you exceed the cash advance limit on the card.

  13. Loias supports harsher punishments against corporations says:

    He can if his state allows it. And I believe every state that allows this also has provisions for you to receive your money for free through at least one free transaction.

    Meaning, you can take that debit card to any bank and cash out the balance without charge on your first transaction. Some states allow more transactions for free.

  14. HalOfBorg says:

    My daughter has the same thing working for fast-food chain, found out about fees when she used the card at stores. No more of that – withdraw at bank or cashback at Kroger.

  15. AnonymousCommenter says:

    He should be able to take the card to his bank and have them transfer the entire balance to his account. That is what I do with product rebates that come on debit cards.

    • Cicadymn says:

      Out of all the comments. This one is the most reasonable. I never thought of it that way. I was thinking every pay day he’d be stuck going to the ATM to cash out and then have to take that into the bank to deposit. That’s a much better option. Just like cashing a check.

    • StarKillerX says:

      Yeah, that was my thought as well.

      IMO he shouldn’t be forced to, but as things sit now this seems like the best option.

    • RvLeshrac says:

      From the T&C of the pre-paid debit card sitting in front if me: “12. THIS CARD HAS NO CASH ACCESS.”

  16. That guy. says:

    While the OP is in no position to demand anything (they can just say, don’t work here if you don’t like our ways), I’d ask for written assurance that there are no feeds associated with the card in any way.

    Or, the OP may already have the name of the bank the card will be issued through, and perhaps the bank can give him a run down.

    For some reason, I feel that there are fees dispite what he was told. Not like a flat fee take out every month to maintain the account, but fees like ATM fees, transfer fees, fees to check your balance, fees if you lost your card, etc. Fees you can avoid, so they can claim “oh there are no fees”, but they are there to collect on most transactions you may make.

    • frank64 says:

      You are probably right, there could be fees if he wanted the added convenience of using it like a debit, but IF he wanted to use it like a check, there would be no fees. The ball is in his court.

  17. mrscoach says:

    My son was working at a grocery store and was told his pay would be by prepaid card. He was not happy and asked if he couldn’t get direct deposit instead. He was told no. He asked again the next week, again no. Finally in his third week he asked a different manager and, surprise, was told ‘no problem, it’ll just take another pay period to take effect’. Payday was like two days away at that point so that was reasonable. He was able to go online and transfer his funds off the card and into his bank account, negating the need to visit an ATM.

  18. sirwired says:

    But if you sign up for direct deposit, your employer has to relay your banking and identification information to their bank anyway. I’m not sure there’s much of a difference.

  19. Lyn Torden says:

    There is NO justification to require that he round down to the nearest $20. His employer should round UP to the nearest $20 if the card company is incapable of operating to the penny. This is consistent with the core principle number ONE.

    • frank64 says:

      That was just a suggestion by Consumerist because if he went to an ATM they often only allow increments of $20. It isn’t a real issue if he uses it like a check or uses it anywhere else.

  20. Eyeheartpie says:

    One of the stipulations I’ve always seen on prepaid debit cards is that you can take one to your local bank of choice and deposit it into your own bank account as cash. No need to go to the ATM and withdraw as close to $20 and deposit that. You should be able to just deposit the debit card itself.

  21. ospreyguy says:

    I had a job in Charlotte that paid quite a bit more than a delivery driver (over 100K a year). It was a contract position and only an 18 month deal but they had the option of either DD or the pre-paid debit. First I had ever heard of such a thing. But what it came down to was the company didn’t cut checks at all due to the trouble. I asked an HR rep how much they pay to use the debit system and she said there isn’t a charge. The bank (i think it was TD Bank) uses it as a loss leader to get you to use the bank… The only fees were non-bank ATM fees and a replacement card fee if you loose it.

    • elangomatt says:

      I think that the DD or pre-paid debit being the only two options is pretty common. The big box retailer I used to work for went this route probably about 10 years or so ago. I would bet that the cost savings of not doing physical checks for payroll would get to be pretty significant when you have tons and tons of employees spread across the country or world.

  22. benminer says:

    There is a lot of confusion here from people who mean well but don’t really know what they are talking about.

    First of all, the OP is not being paid with a prepaid debit card like you would buy off the shelf at Walmart and give to your cousin for his birthday. What the OP would be getting is a “pay card” which is basically a savings account with a debit card.

    Secondly, it’s simply not reasonable to expect that there be NO FEES whatsoever to use this card. If you withdrawl cash at a private ATM at a bar or bowling alley, you will pay a fee just like anybody else. They key here in terms of legality is whether or not you have reasonably convenient options to get your entire net pay (to the penny) for free. If you do, then the law is satisfied. Most pay card programs work with a network of ATM machines that allow at least one free transaction (sometimes more) each time you are paid. In addition, you can go into any bank with the VISA/MC logo on the door and receive your entire net pay for free. The administer of this prepaid may also offer a wire transfer option into another. And of course there is always the option of cash back when making a purchase.

    As to the cost for the employer, many of these pay card programs are free or almost free. Offering direct deposit to your employees, while not all that expensive, is not. Physical payroll checks are even more expensive.

  23. RandomLetters says:

    My company used to purchase cards like this for awards for participating in the safety program. One month they handed out cards recieved just a week prior and when people tried to use them they didn’t work because the company that had issued them had gone out of business. My worry would be something like this happening with my paycheck. I would bet that the cards are being issued by a third company that does only prepaid cards.

  24. El_Fez says:

    On the other hand. . . .yum! Pizza!

  25. Karney says:

    Not sure if this still applies, but when I worked at Gamestop in college (7 years ago), they only distributed pay via a debit card as well. Got one “free” transaction per pay period, which was every other week. Otherwise there were fees attached.

    That was from the card side, so of course there were fees going the other way (using a BoA ATM, for example, would generate its own fee on top of the prepaid card fee, waived or not).

    This also had its limitations, where if I made say $239 in a week, I would not have access to $19 of my pay through an ATM (at the time there weren’t any ATM’s distributing 10’s in my area).

  26. ldillon says:

    Part of the scam here is with Direct Deposit, the employee has the possibility of earning interest (pathetic as it is) on his money immediately. With a Debit card, the bank holds the money and can collect interest on it until the money is withdrawn. In a large company, this is a non-trivial amount of money.

    I’m also curious as t what happens if the card is lost or stolen?

    I’m also curious about the “no fees” statement. Does this mean that it is 100% impossible to ever, in any way be assessed a fee? I doubt it, and we all know how much money banks make on these kinds of fees.

    • frank64 says:

      At the very least there would be no fees if he used it like a check, IF there were fees it would be if he wanted to use the card like a debit card. This would only be if he WANTED the convenience and decided it was worth the fees. Adding options is not a negative, because you are at the least no worse off, but some would welcome the added convenience. Yes, probably a ripoff, but that is not a negative if using like a check has no added fees.

      He is not, in any real way worse off than if he received a check, and most likely is better off. He wouldn’t have to go in to pick up the check or have it mailed, it is probably loaded earlier than he would receive his check, and he might even be able to transfer to his bank for free via computer.

      As to interest, likely his employer doesn’t receive it, it is likely debited from the employers account when the money is deposited into the debit card account. The employer is slightly worse off than if it was a paper check. The bank gets a bit of free money, but that is up to the employee how long they get to keep it. The float still exists with checks, and exists here. I think you are really stretching to look for negatives, and overlooking when they exist with checks.

  27. shopalooza says:

    My first thought- The employer is getting points for the prepaid debit cards!

  28. Buckus says:

    IANAL, but this feels like it violates some sort of federal law in regards to how someone can get paid.

  29. There's room to move as a fry cook says:

    Which major pizza chain? Why hide the name?

  30. ChuckLez says:

    “My Employer Will Only Pay Me By Prepaid Debit Card. Is That OK?”

    As a matter of fact, it isn’t.

    (sorry, had to, for anyone that gets the reference).

  31. PHRoG says:

    Take said card to your current bank and deposit the balance on it each time you get paid. :)

  32. Sir Winston Thriller says:

    Not in Vermont. Vermont law, 21 V.S.A §343 does not permit wages to be paid via debit card

  33. RandomLetters says:

    My first read through on this I was firmly against paying someone on a card that while they say it doesn’t have any associated fees will surely do. But after reading comments on how these cards work (thank you benminer) I have to saying I’m leaning to the company’s side with this one now. I’m making some assumptions here but it looks like all the payroll money each pay period is deposited into one account. Each card is set a limit to draw on that account based upon the employees pay for that period. If thats the case and employees are given the option of depositing the full amount of that card into another account (or getting it as cash) I have to say that this makes good financial sense for the company. If even a small percentage of the employees (of a national pizza chain sized company) leave their pay there and use it as a debit card the interest over time could add up to be a large sum. If thats not how it works then I need to borrow some money to start a business… who’s got a few extra million they can spot me?

  34. limbodog says:

    Unfortunately, the OP would likely have had his information given to a payroll company in either case. His employer probably does not handle payroll themselves.

  35. quail says:

    As long as he’s able to withdraw the cash from an ATM, there’s nothing seriously wrong with this. Cutting checks for a large operation amounts to a big wad of cash. Doing direct deposit or debit cards is the path that many companies are moving to, especially when dealing with a possibly transient workforce like janitorial, fast food, etc. One janitorial firm when these things rolled out discovered that they saved over 1.25 million when they moved their workers to this system.

    Downside to it is that you do have to find an approved ATM that won’t charge fees when you make the cash withdraw. And you can’t have money sitting on the card too long or you incur fees.

  36. wkm001 says:

    If it is a Visa prepaid debit card you can walk into any Visa participating bank (your bank) and withdraw the money. It really stinks to have to go in the bank though.

  37. trencherman says:

    That “obvious” solution sounds like a pain in the butt to me.

  38. lolwat says:

    To say there are no fees associated with the card would be bull. Most likely, there is at least 1 free ATM withdraw per pay period. You probably would also have at least 1 free cash advance to use. Which then becomes a bit of a pain. You can go into any bank and get the cash advance, but you have to 1) be sure no fees are associated from the card and 2) that your pay is below the cards daily cash advance fee.

    Essentially, using one of these debit cards is opening up a checking or savings account at the bank that the card is from. They have routing and account numbers attached to some of them if you look deep enough. Banks push these cards because they, in the long run, can charge fees to most people. Monthly fees if you carry a balance, balance checks, card declines, using your card over a certain amount of times, etc add up. Its cheaper for a company to stop printing checks

    Banks are starting to charge businesses for direct deposit which is shady as hell. Just another reason to push debit cards onto employees.

    One other thing I can note is that I picked up a retail part time job that has one of these debit cards and I opted to take it since it was Citibank and the terms are fine with me. ( I make just enough to cover 1 of my bills there so I have it just auto charge that card and I dont have to worry about moving money around). When they sent me the card, I was also sent these “payroll checks” which I can just basically fill out, go online or call a toll free # to get it authorized for that amount, write that # on the check and take to a Citibank branch and cash it like a payroll check. How stupid. I thought it was supposed to be eliminating checks.