More than 4-million Social Security and Supplemental Security Income recipients who do not have bank accounts now have the option of getting a prepaid MasterCard debit card with their benefits instead of a paper check. A pilot project in Illinois last year has been expanded to 10 Southern states, including Florida. Here's a look at it.
How does this work?
Instead of transferring funds to a Social Security recipient's bank account, the government automatically transfers their benefits to a debit card. Called Direct Express cards, they are issued by Comerica Bank. Each FDIC-insured card will have its own PIN number. Users cannot add their own money to the card.
Where can they be used?
Just like regular debit cards, they can be used to get cash, pay bills and make purchases anywhere that accepts MasterCard — banks, retail outlets and automatic teller machines. Users can pay bills online or buy money orders at the post office. They can check their balance at ATMs, by phone or online.
Who is eligible?
The program is designed for people who receive Social Security or Supplemental Security Income payments by paper check and do not have a bank account. However, anyone who receives such benefits can sign up. Of course if you have a bank account, the Treasury Department would prefer you sign up for direct deposit. Then your bank can issue you a debit card.
Why is the government doing this?
The card is part of a push to encourage the 10.5-million people who still get paper checks to switch to electronic payments. The change could save the government as much as $42-million a year. One stumbling block is that about 2.1-million Social Security recipients don't have bank accounts. Neither do about 1.8-million disabled and low-income people who receive Supplemental Security Income.
What are the benefits?
Like the 40-million people who get their benefits directly deposited to bank accounts, cardholders will not have to worry about checks being stolen or lost in the mail. (According to the Treasury Department, about 60,000 checks were forged last year and 700,000 were reported lost or stolen.) They will not have to cash their checks or pay associated fees. As with a regular debit card, the card can be replaced if lost, and liability for unauthorized charges is limited to $500.
How much will it cost?
There are no signup fees. Bank accounts or credit checks are not required. Some transactions will have a fee, like ATM cash withdrawals. The first ATM withdrawal each month is free. Additional withdrawals from the 50,000 Direct Express network ATMs will cost 90 cents. Out-of-network withdrawals can cost several dollars. Officials suggest getting cash back with purchases at stores or making free cash withdrawals through bank or credit union tellers. There are fees for optional services, such as a monthly paper statement, and use of the card overseas.
Where do I sign up?
About 14,000 people already have signed up through the pilot project. The rest of the country will receive notices this summer. If you didn't get a notice with your check, or threw it out, you may sign up by calling, toll-free, 1-877-212-9991 or visiting www.usdirectexpress.com. To sign up for direct deposit of your benefits to your bank account call, toll-free, 1-800-333-1795 or visit www.godirect.org. Another option is to sign up for direct deposit through your bank or credit union.
Sources: Times wires, Dallas Morning News, U.S. Treasury Department, USA Today.