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Social Security News
Some Seniors May Soon Get Their Social Security
Benefits in Prepaid Debit Card
Treasury to introduce Direct Express cards for
those without bank accounts
 Jan. 7, 2008 Senior citizens who do not have bank
accounts may soon be getting their Social Security payment with a
prepaid debit card. The Department of Treasury says the new Direct
Express cards will provide a safer and more convenient alternative to
paper checks.
The Treasury's Financial Management Service (FMS)
has designated Comerica Bank as its financial agent in a new initiative
to offer the option of using a prepaid debit card for receiving Social
Security and other federal benefit payments. Comerica Bank, Dallas, was
selected, in part, because of its experience as a prepaid card issuer
for millions of benefit recipients, particularly for state government
programs.
The Treasury estimates that four million Social
Security and Supplemental Security Income (SSI) check recipients do not
have bank accounts, placing them at greater risk of check delivery
delays due to poor weather, national or local emergencies, and other
check related problems, such as lost or stolen checks. In fact, nine
times out of 10, problems with Social Security payments are linked to
paper checks, not direct deposit.
Financial
Flexibility and Security
The Direct Express card will be introduced in
spring 2008 in some states and will be phased into national distribution
by the end of the summer. Direct Express card holders will benefit from
improved financial flexibility and security as compared to paper check
recipients.
Each month, payments will be automatically
deposited on the Direct Express card account on the federal
beneficiary's designated payment day - which means people will have
faster access to their money than they would if they had to cash a paper
check.
Card holders will be able to access their money at
ATMs and financial institutions nationwide. They will be able to use
their card to get cash back and make purchases at retail locations, as
well as pay bills and make purchases online. In addition, these accounts
are PIN-protected, FDIC-insured, and subject to federal consumer
protection regulations (Regulation E).
"Direct Express represents a significant step
forward in the evolution of federal benefit payments," said FMS
Commissioner Judy Tillman.
"The explosive growth in the prepaid card industry
offers an important opportunity for Treasury to give unbanked payment
recipients secure, easy access to their funds, at low or no cost to the
cardholder.
We ultimately would like to see an all-electronic
Treasury - with all the security, efficiency and cost savings that would
entail. This card takes us closer to that goal by combining the best in
payment innovation with sound public policy. If every unbanked federal
check recipient signed up to use the card, it would save taxpayers about
$44 million per year."
"Millions of federal beneficiaries remain outside
the banking system, which means they don't have access to payment
methods that most Americans take for granted, such as getting cash at an
ATM or paying with a card at a store," said Nora Arpin, Director of
Government Electronic Solutions for Comerica Bank. "The Direct Express
card provides an opportunity for people outside of the banking system,
either because of personal choice or perhaps their inability to obtain a
bank account, to gain a foothold in the financial mainstream."
The Treasury has already experienced significant
success in increasing electronic payments with its Go Direct campaign,
which is aimed at motivating banked federal benefit recipients to switch
from paper checks to direct deposit. To date, Go Direct has achieved
more than 1.6 million direct deposit conversions.
"Direct Express" is a registered trademark of the
U.S. Department of the Treasury, Financial Management Service.
The Wall Street Journal reports this
is how the card will work
● Cardholders will get one free ATM cash
withdrawal per deposit per month, but Comerica will charge 90 cents for
each additional withdrawal.
● Users may also face surcharges at many
ATMs. Other fees include $3 for international ATM withdrawals, 3% on
international currency exchanges, 50 cents for each online bill payment
and 75 cents per month for paper statements.
● Cardholders can avoid surcharges at more than
56,000 designated ATMs, including those run 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 opt to receive free deposit
notifications or low-balance alerts via text message, email or automated
phone call.
● The debit card should mean cost savings for
many Social Security recipients who don't have a bank account and who
use check-cashing services to cash their benefits checks, banking
experts say.
>>
Read more at the Wall Street Journal.
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Treasurys Go Direct campaign says all should
switch to direct deposit