Social Security Debit Card

(1/16/13)- March 13th, 2013 is the deadline that had been set for converting all federal benefit payments, including Social Security, from paper checks to electronic deposits. Please see our earlier item dated 7/21/10 below.

Federal benefit recipients must elect either to receive their payment via a direct deposit of their monthly check into their bank account or to use a prepaid debit card issued by the federal government which is called the Direct Express card.

Walt Henderson, Director of the Treasury Department's Go Direct campaign, stated that those who have not made the election will still receive a paper check in the mail. Along with the paper check they will receive a letter urging them to "make a choice". They may also receive a Direct Express debit card, which they will be urged to use.

About 93% of all Social Security recipients receive their checks electronically. There are approximately 5 million beneficiaries receive their checks by mail.

(7/21/10)- The U.S. Treasury announced in April that it would stop issuing paper checks in 2013 and make all payments electronically. Over 2 million people who receive Social Security checks in the mail would have their benefits deposited directly into bank accounts or onto prepaid debit cards. Please see our item dated 1/7/08 for more info on the debit cards that are called Direct Express.

About 80% of Social Security recipients elected to have their checks deposited directly to their bank accounts.

It is illegal for creditors to take Social Security payments to recover a debt.

The low-cost Direct Express debit card is FDIC insured and can be used to make withdrawals at ATMs and banks, to pay bills and to make purchases.

(1/7/08)- The Treasury Department announced that it would issue prepaid debit cards for Social Security recipients in an effort to provide safer and cheaper benefits payments. The card, named Direct Express debit card will be introduced in a handful of states this spring and rolled out nationwide by the end of the summer.

Comerica Inc.'s Comerica Bank, which is Dallas based was selected to issue the card which is targeted at Social Security and Supplemental Security Income recipients who do not have a bank account.

There will be fees associated with the card usage and a significant cost will be incurred in attempting to get the recipients familiar with the program. The Federal Emergency Management Agency offered debit cards loaded with emergency relief funds to hurricane victims in 2005.

The Treasury is hoping to move more and more of its system over to an electronic usage one. In 2005 the department started its Go Direct campaign, which was designed to encourage benefit recipients with bank accounts to switch to direct deposit.

As many as 40 million U.S. households either have no bank account or make little use of banking services, according to an estimate from the Chicago based Center for Financial Services Innovation.

The program will begin in April when the Treasury Department begins mailings to encourage benefit recipients without bank accounts to sign up for the card, and for those with bank accounts to sign up for Direct Deposit.

The card will be automatically loaded on the payment date and can be used immediately. Card holders will be able to use the card at ATMs, bank branches, retail locations and online.

Comerica will earn money on cardholder fees, interchange fees when cardholders use the card at the point of sale, and the float on the funds sitting in the account until it is used. The company estimates that there could be anywhere from 2.5 million to 10 million Direct Express card holders in five years. The company's government card business, begun in 2004, now has over two million card holders.

Card holders will get one free ATM cash withdrawal per deposit per month, but the company will charge 90 cents for each additional withdrawal. Fees may be assesed against the card holder if used at some other bank's or company's ATM machine. Other fees include $3 for international ATM withdrawals, 50 cents for each online bill payment and 75 cents for paper statements.

There will be no fee charged for usage of an ATM machine at machines operated by 7-Eleven and PNC Bank. ATM balance inquiries and cash withdrawals at a teller window will be free, and there will be no fees for overdrafts, declined transactions or inactivity.

Cardholders can receive deposit notifications or low-balance alerts via text message, email or automated phone calls. It costs the government 89 cents to issue a paper check in fiscal year 2006, versus 9 cents for electronic payments. Four million Social Security and SSI recipients do not have bank accounts.

PIN numbers and FDIC insurance protect the debit card accounts.

"How to Select a Nursing Home"  

By Allan Rubin
updated January 16, 2013

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