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Use new debit card to receive Social Security benefits
Social Security recipients now have the option of accepting payments via a debit MasterCard instead of paper checks, the Treasury announced today in a press release.
While the Direct Express debit MasterCards, issued by Comerica Inc., are currently available in only 10 states, the program is expected to be available to citizens in every state some time this summer. Treasury officials told MarketWatch on Monday that 14,000 people had already signed up for the card.
The payment card option has no sign-up fee and requires no bank account or credit check for enrollment. Additionally, there is no minimum balance requirement, which will be helpful to the unbanked population. According to the press release, about 4 million Social Security recipients do not have bank accounts.
Along with the card comes much-needed financial education: "A robust public education campaign will accompany the launch of the card and will promote debit card literacy among likely users, reaching them through print and Web materials, public service announcements, direct mail and partner organizations," according to the Treasury press release.
A Reuters article about the new debit card cites research that "seniors without bank accounts pay an average of $6 and as much as $25 to cash each Social Security check, eating into often low monthly incomes. This also makes them more vulnerable to check fraud as well as robbery when carrying large amounts of cash."
With the card, users can withdraw money at most banks for free and get cash back for free when shopping at retailers. Each cardholder also gets one free monthly withdrawal from an ATM machine in the network. The money deposited onto the card is FDIC-insured, and MasterCard liability protects users against unauthorized use of the card when it is reported in a timely manner. This card eliminates chances of Social Security checks being stolen, delayed or lost in the mail.
Another perk of the card is that the benefit payments are automatically deposited to the card each month -- there's no need to wait for the money to arrive in the mail.
The cards aren't perfect, however; after the one free ATM withdrawal, each addition one costs 90 cents plus ATM surcharges. If you want to receive a paper statement, that's 75 cents. It costs $1.50 to transfer the money into a bank account and there are fees for using the card abroad.
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