Social Security Benefits Payable by Debit Cards
Social Security Benefits Payable by Debit Cards
March 1, 2008
Author: Catherine M. Callery (Kate)| Louise M. Tarantino
The Department of the Treasury announced that beginning this spring, people in Texas, Oklahoma, Arkansas, and Louisiana will be offered the option of receiving their Social Security or SSI benefits in the form of a prepaid debit card instead of a paper check. The program is expected to be rolled out nationwide later in 2008. The targeted audience for the debit card use is beneficiaries who do not have bank accounts.
The Treasury awarded the contract for the new program to Comerica Bank in Detroit. The cards offered will be Visa and Mastercard and can be used wherever those cards are accepted. There will be no monthly fee and no fee for overdrafts or declined transactions. The first withdrawal at an ATM will be free, with subsequent withdrawals within the network charged a 90 cent fee. A recipient using the new debit card could get the entire amount withdrawn by a bank teller. But the idea is to offer a more secure solution, instead of carrying around large amounts of cash.
The Treasury said that it chose Comerica Bank because of its experience running electronic benefits programs for state governments. Comerica makes money on some of the fees connected to the card, the float of the unused money in the accounts and interchange fees when the card is used at retailers, but consumers would not pay extra to use the new debit cards to buy goods at retailers. Priceless!
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