Originally Posted by nvidia2008
3. If US major banks offer this simple, affordable service that I enjoy (which is open to anyone), why can't unemployment beneficiaries just use a bank account like that?
They can and your link notes specifically that if they give the state permission to directly deposit the funds into their own checking account, that there are no fees possible.
Why this "special" kind of debit card thing? Why not a regular bank account, regular debit card? What benefits does it offer? This is the part I don't get. Added complexity for no reason other than state/federal government sanctioning of lining the bank pockets, it seems to me.
You obviously haven't dealt with the poor or lower classes. It's pretty simple. Before the state would have sent them a check and they would have been expected to cash it or deposit it into their checking account. If they do anything like that now, direct deposit or cash out or withdraw the entire amount of the benefit, then they have no fees and all is well in the world.
The problem is that many poor folks don't follow the rules. They are impulse driven, have a lack of education and a lack of foresight. So they see an Apple iPod and want it and they will write a check for it. The check bounces but they have their Apple iPod. It dings their credit, racks up a bunch of fees and eventually puts their name into a system like ChexSystem.
When that happens, banks won't let them open a new checking account and they must resolve the problems with their old checking account.
So you see the problem comes from taking this benefit and asking for it to be dribbled out over the week while using the card like your own checking account. If you write a check to me and I ask the bank to cash it slowly a dozen times for varying amounts with regard to how to disperse the funds, that would certainly be more work than handing me the cash one time from the check.
So why do the poor not take the benefit as a lump sum and avoid the charges? Some of them are self-aware and want to protect themselves from themselves. They know if they have all that money burning in their pocket, they will spend it on whatever impulses hit them. The flip side of it is just laziness. They could take it as a lump sum and manage it, but hey, it is free money, it shows up every Friday and why work to manage it when I can just whip out my card and use it when the fancy strikes me.
Sure, I may have no authority to claim how this may not increase government efficiency, but, come on, like I said, we're all technology aware here, direct deposit into bank accounts is no biggie.
I think you're stuck in a disconnect on the understanding here. The possibility of the fees goes away completely if the state can directly deposit the funds into the person's own checking account. The fees only become possible if the person cannot or will not do this and wants to use the funds being received from the state on the state debit card like their own person checking account.
This is from your first link....
He's afraid to withdraw his full benefits in one shot, knowing that the bank could sock him with a $17.50 overdraft fee if he exceeds his balance. So he pulls out small amounts of cash as he needs it, incurring about $15 in fees in the last two months he says.
Again this is from your article....
In Oregon, jobless people who apply for unemployment benefits are automatically given their weekly benefits via a U.S. Bank ReliaCard unless they expressly opt out and furnish information about a personal bank account to establish a direct deposit.
Six Oregon residents interviewed by The Huffington Post said that when they applied for unemployment benefits online, the state's website did offer them the opportunity to set up a direct deposit instead of relying upon a prepaid debit card furnished by U.S. Bank. But the page on which they were offered the options did not clearly lay out the fees that can be incurred with the debit card option, they said. Another section of the Web site does list the fees, The Huffington Post found, but locating that information requires looking on a separate page.
From my article....
At first, her benefits were direct deposited to her Bank of America checking account.
In August 2010, unemployment officials summoned Gortman for a benefits review during which she says she was strongly encouraged to sign up for a prepaid debit card. Gortman resisted. Fearful that the agency would delay her benefits if she did not submit, she says, Gortman signed the form. A few weeks later the card and a brochure came in the mail. The potential fees were disclosed in the fine print, she says, but she initially missed them.
She received a few checks, and then the state sent her a debit card, though says she has no recollection of applying for one.
Even now that she is cognizant of the fees, she is afraid to switch to direct deposit, fearing a resulting gap in her weekly benefits. Her family's finances are so tight, she says, that any delay puts them behind on the bills.
Now again, I've dealt with this class of people for a long, long time. The news article notes that both people mentioned could easily go to direct deposit and avoid all fees. They blame other parties or conveniently don't recall how they came to end up on the prepaid debit card but the ability to fix it is pretty simple. There's a reason they won't. The articles won't dig into it but as a landlord I know why they won't. Their checking accounts are either closed and their names are in ChexSystem or they have their accounts sit empty on purpose and won't make deposits because they have judgements and garnishments that the banks might grab the money for first. As someone who has gotten judgements against people, I know that's one of the things you do to collect it. You take the judgement to a bank and when some money comes in, they just grab it to fulfill the judgement.