States Shortchange The Unemployed With Junk Debit Card Fees: Study

WASHINGTON -- Many states shortchange the jobless by distributing unemployment benefits on debit cards loaded with obnoxious fees, according to a new study by the National Consumer Law Center.

Of the 40 states that have switched from paper checks to prepaid debit cards, 22 states' cards charge ATM fees, 24 charge balance inquiry fees, and 28 charge inactivity fees. The cards in Arkansas, Idaho, Nebraska, Ohio, and Oregon come with overdraft fees ranging from $10 to $20.

And in Connecticut, Iowa, Rhode Island, and Tennessee, cardholders "must pay for every ATM inquiry or pay a denied transaction fee if they request cash when their balance is insufficient," the study says.

Tennessee stands out for having the card with the most "junk fees," the study says. Tennessee's card, provided by JPMorgan Chase, charges $1 for initial ATM withdrawals, 40 cents for balance inquiries, and 25 cents whenever someone swipes the card at checkout. It's one of just four states that doesn't provide even one free ATM withdrawal per deposit.

Tennessee doesn't think its card's fees are junk.

"I’m not sure calling them 'junk fees' is a fair statement," said Jeff Hentschell, a spokesman for the Tennessee Department of Workforce Development, which distributes Tennessee Automated Payment cards for jobless benefits. "When you look at the context of where we were and where we are today, the fees are actually minimal compared to where people were going to cash paper checks before."

Indeed: The NCLC study itself points out that for people without bank accounts, "getting cash from a UC prepaid card will usually be cheaper than paying a check casher to cash a paper check."

Hentschell added his department has a handy website that lays out the fees.

As for Chase, the bank says it's giving states a good deal on a valuable service.

"Each state negotiates its own contract and fee structure from numerous bidders," a Chase spokeswoman said in an email. "To date, states have chosen card solutions that cost government nothing and save taxpayer dollars, selecting their card provider based on the best mix of fees and services to the consumer."

The NCLC study says the Bank of America-issued cards in California and New Jersey are the best, since they offer "free and ample access to cash and transactions with no penalty fees." The study says close runners-up are Chase's card in Arizona and Citibank's in Maryland.

Comments

[fortressfountain]

06:42 PM on 05/18/2011

There is a solution. You can withdraw all of the money-depending on how much is in the fund-you may have to make 2 withdrawals.
They cannot charge you inactivity if nothing is in the account.
Also who needs the gov poking into the cup of coffee you charged at a gas station?

[akkdio]

01:47 PM on 05/17/2011

Some of these contracts were awarded 3-5 years ago and the fees have not caught up with the times. You will find the most recent awards have the best pricing. The industry is consolidating and the fee structure is going down. There are several good alternatives to these cards for the people in those states (as long as the can choose another direct deposit) One of these options is another pre-paid card like the MoneyManagerCard which has low fees and a free ATM network. Walmart also has a better fee structure then TN....! Then there are a few online banks (if you can get a bank account) - Perkstreet or ING. States should let the consumer choose instead of cutting big deals with large institutions.

[Box 714]

12:12 PM on 05/15/2011

The power managers of death have stolen growth and development reality, to implement growth and development illusions in the harvesting of flesh and lands. Its, evolutionary hypocrisy and religious hypocrisy combined, in which death dominates existence and the future and CAP a LIST is the worshipping of death to sustain the advantages death relates to the owners.
If the passage of temporal power in the form of wealth is the real evidence of power, manipulations of Government and people’s quality of life, CAP a LIST cistern is unfit for purpose. The people own the growth and development morality for human civilization, not the predatory death masters utilizing temporal monopoly in the production and sustainability of their own cushions. Transparency might be in revealing who with the power of the CAP, have used their undemocratic rewards cistern of the traditional toilet to assign allegiance to the notions of independence in the animalistic ritual games.
If the animalistic survivalist cause of the fascist is the utilization of death as power, then equal opportunity is a joke, in the meaning of life, games. The real meaning is freedom of choice, the control of choice is the private control of communication in the private traditions of death and the public conditions of conformity to illusions. Death worship is the CAP a LIST program of social control. Recession is the control of social mobility. Tee pee's big adventure - top heavy, pissing in the wind, creation of yellow brick road righteousness of sucky/sucky.

[Jeanette Schotl]

07:51 AM on 05/14/2011

The banks that we bailed out have to make money somehow. The lousy excuses made by the banks, unnacceptable. Maybe everyone should grab a picket sign. This'd be a good one for Elizabeth Warren's Consumer Protection Agency

[Yorksgal]

04:20 PM on 05/13/2011

Truly disgusting. This is where we need states to have their own banks a la North Dakota.

When someone I knew was unemployed, they found about the fees and were able to buy groceries and then take out the rest as cash, so were only hit with one fee.

Oh as for all those trollies saying it is people's own fault - I hope karma pays you a visit and then you can lose your money on some slick wall street investment, fall sick and pay for all your expenses after you are no longer able to work, and then become unemployed.

[wdw808]

09:37 PM on 05/13/2011

yawn.........beyond 26 week it is an entitlement nothing more......beggars can't be choosers

[RealTimeHistory]

02:37 PM on 05/16/2011

Spoken like someone who has never been unemployed during a long-term recession (isn't that what they call a depression?). Current situation: 1 job, 6 unemployed. Polithugs are more interested in poking their noses into people's private lives, and imposing their own religious beliefs than in creating a real job-producing economy.

Troll.

[demilieu]

02:57 PM on 05/13/2011

Texas uses a debit card through Chase Bank. There's a $3 fee for each withdrawl at a non Chase ATM, but I believe there's no charge if you use a Chase ATM or go to a Chase branch bank in person.

[wdw808]

09:38 PM on 05/13/2011

problem solved

[RealTimeHistory]

02:41 PM on 05/16/2011

Only if you LIKE paying $3.00 a pop to access your money, if your supermarket doesn't happen to have a Chase ATM. At current gas prices, who can afford to go across town to find the right ATM, even using a bus, if it is even available.

Walk a mile in someone's shoes, before you attempt to solve their problems.

[StopMakingSense2]

02:34 PM on 05/13/2011

What's the surprise? Totally fits with the times. What do you do to a man when he's down? Kick him! Only bleeding hearts give a hand up. You wouldn't want that label so dredge up that meanness or you will be next!

[SRPinPGH]

01:30 PM on 05/13/2011

I was amazed to see the fees tacked onto the card I received during my brief (four-week) stint of unemployment almost three years ago. It's really sad that states have the temerity to gouge the unemployed; not only must they pay fees on getting their unemployment checks, they get taxed on what they receive.

[Cherie Lyon]

04:59 PM on 05/13/2011

I bet those fees can't be claimed on tax day, either.

[Genesis Kobos]

01:24 PM on 05/13/2011

Thank you for your article. There are a few things that need to be pointed out in regards to the use of prepaid cards for unemployment benefits. In most states, benefit cards have very few fees associated with them, and in many cases these fees can be avoided all together. In addition, there are a number of advantages to prepaid cards, including the fact that the cardholder is protected if the card is lost or stolen. Prepaid cards also allow consumers without bank accounts to save money in check-cashing fees. For the state, prepaid cards save a considerable amount of money when compared to the cost of distributing checks for unemployment benefits. Overall, the majority of cardholders who receive unemployment benefits on a prepaid card do not pay fees.

The Network Branded Prepaid Card Association, a nonprofit dedicated to ensuring consumers have a positive experience with prepaid cards, offers prepaid card tips for consumers at www.nbpca.org.

Jennifer Tramontana, NBPCA

[Yorksgal]

04:18 PM on 05/13/2011

"In most states, benefit cards have very few fees associated with them, and in many cases these fees can be avoided all together."

Well that's nice - what if you don't happen to live in one of those states. And unless you are told, how do people find out about avoiding fees?

If the states are able to save a considerable amount of money, then wouldn't it be nice of them to pass on just a wee bit to those who are having to use the cards?

[ScaredAcademic]

04:24 PM on 05/13/2011

Ms. Tramontana's bio affirms that she, "works with clients in the prepaid industry and beyond to optimize their message and enhance their presence and reputation." Makes sense that she would have something to say about "clients in the prepaid industry" gaining a reputation for junk fees. Also, despite being a nonprofit, the organization has an interesting board of directors, drawn as they are from the banking community. Just because an organization is nonprofit does not mean that it is not first and foremost charged with profit creation for its members.

Let's suppose that Ms. Tramontana is indeed telling the truth. That is but one side -- fees to the recipient. The other is fees assessed to the state for the product. The third is fees assessed to merchants for the method of payment. Given that those actually contracting with states are doing so on a for-profit basis, why am I skeptical that this is yet another bit of outsourcing that ends up costing more...

[BeautifulWorld]

10:35 AM on 05/13/2011

Can they not take all the money out at once and deposit it into their own bank account? Is that a huge problem?

[InYourWorld]

12:04 PM on 05/13/2011

A friend does that, but since there is no BoA near him he pays about $6 to get his cash out. That $6 could be better spent on anything BUT bank fees.

[runswithscissors]

12:52 PM on 05/14/2011

Depends on the state. I know in at least one state the maximum withdrawal allowed is only $40. So, yes, in at least some places that IS huge problem.

[wdw808]

09:37 AM on 05/13/2011

big deal.......it is an entitlement........not their money

[Michael Shanley]

09:56 AM on 05/13/2011

how does an insurance contract become an entitlement, would you say that about your P&C covergage on your car or home?

[wdw808]

10:02 AM on 05/13/2011

when the payout dips into tax dollars.......and the entitlement grows beyond the promised amount

car insurance never pays multiples of what the car was worth

nor is your employer mandated to pay your car insurance

but thanks for playing......

[BeautifulWorld]

10:25 AM on 05/13/2011

A portion of the taxes I pay are used to support the food stamp program but I bet if I were to sign up you'd still consider me on welfare and a bum, would you not?

[bleubunny]

12:38 PM on 05/13/2011

I wish Sarah Palin would quit posting here.

[wdw808]

01:04 PM on 05/13/2011

agreed

[Dana1982]

09:05 AM on 05/13/2011

Since the poor are the ones to use government services, they should be the ones who pay for these services. The poor are the ones who use the most of government services yet they pay the least in taxes. Clearly the poor need to pay more in taxes. Poverty should be painful.

[nixrox04]

09:16 AM on 05/13/2011

This comment is a clear and powerful message of the attitude of the elite right in America.

[wdw808]

09:41 AM on 05/13/2011

no.......just the attitude of tax payers

[Dana1982]

09:44 AM on 05/13/2011

OK, maybe I was wrong. We need higher taxes on the rich states like California and New York so their economies are more equal to the poorer states like Alabama and Mississippi. It just isn't fair that the "Blue" states have more wealth then the "Red" states. We need to move more wealth out of these rich "Blue" states to bring up the standard of living in the "Red" states.

[wdw808]

09:38 AM on 05/13/2011

agreed

[Fairand Informed]

06:33 AM on 05/13/2011

Banks have to make money in order to keep providing services to the community. The fees on these cards are necessary to keep the programs afloat and they are much cheaper for the consumer and for the states.

[Gwendolyn Rouse]

08:12 AM on 05/13/2011

Banks are the crooks and will use any thing to rip the poor off.

[Fairand Informed]

04:52 PM on 05/13/2011

Not true. Look at free checking, free debit cards (at least until the Durbin amendment goes through), free atm transactions. Banks are forces for good in the economy. They loaned me money to buy my house.

[BeautifulWorld]

11:35 AM on 05/13/2011

LOL Banks don't 'provide' services. They make a killing off of them.

[Fairand Informed]

04:53 PM on 05/13/2011

Some do. Find one that doesn't. They're out there. Surely your community banker is a better option than Bank of America.

[So-called-bob]

02:15 AM on 05/13/2011

If you don't help the poor you can't save the rich.

[Cherie Lyon]

05:04 PM on 05/13/2011

F&F. Sooner or later the rich won't have it either.

[weathergirl]

10:35 PM on 05/12/2011

Wow...and the GOPers are not letting Elizabeth Warren take over the Consumer Protection Agency!

[Anthony Denaro]

10:20 PM on 05/26/2011

If the Republican Congress has its way, by the end of the decade, the once great US of A will have become a 13th Century Feudal Society, like Mexico, with a handful of obscenely rich, a dwindling middle class, and a majority of people in poverty.

I'm hoping to retire in San Miguel de Allende while it's still affordable. I'd done with Amerika!