No one likes fees of any kind, but those on limited budgets — due to unemployment — especially have low patience for arbitrary fees.
Unemployment benefits are exactly that; benefits, or special monetary extensions to help those who have hit an occupational rough patch. So should these benefits extend to other financial areas in an unemployed person’s life?
Banks Secure Contracts to Offer Public Benefits Cards
Times are changing, and so is the way unemployment benefits are paid. A lot of states are resorting to providing benefits via benefit cards that act the same way as prepaid debit cards. By avoiding the printing and manufacturing of benefit checks, state governments, and taxpayers, save money.
It seems like a smart money-saving move, but what about the people using these cards? A Huffington Post article profiled a woman, Shawana Busby, who needs to pay withdrawal fees with Bank of America (NYSE: BAC) each time she needs to access her $264-a-week benefits.
Unfortunately, there are no ATMs near Shawana Busby and driving to the nearest one wasn’t a cost-efficient option. Bank of America is not the only one offering these cards; U.S. Bank, Wells Fargo and JP Morgan Chase have plans to provide access to public benefits through debit cards.
Walking a Fine Line
The next few steps large banks will take with these cards are important ones. With tensions running high, and (already marred) reputations on the line, big banks need to choose wisely when it comes to implementing fees on these cards. Currently 41 states are contracted to provide accomodate these types of cards, and there is no limit to how much banks can charge the merchants accepting them or consumers using them.
Whether or not these cards are beneficial for their users is debatable, but the fact that they save money for states isn’t. According to a Bank of America spokesperson, who spoke with American Banker, these cards will save up to $5 million in check printing and mailing costs per year.
Although there are few public details about the exact terms of these contractual agreements, there is a definite possibility that banks will be using these cards to make up for some of the lost profits. Some of the fees South Carolina users can expect from their Bank of America prepaid debit card include;
- a $1.50 Bank of America withdrawal fee (1 fee waved per a week)
- a $1.50 International ATM withdrawal
- a $1.50 Non-Bank of America withdrawal fee
- $15 for domestic emergency cash transfers
- $30 for international emergency cash transfers
Banks Find A Fee Loophole
Debit Swipe fee caps have caused quite a stir in the banking community as banks search for ways to make up for the decreased profit. The Durbin Amendment has been used as an excuse for unsuccessful attempts to add debit card fees, and take away free checking among other inconvenient pricing-structure changes.
But it looks like banks won’t have to worry about losing profits from these government assistance cards because they do not fall under the reach of the Durbin Amendment — making them an easy target for pesky fees.
Do you think it’s fair for banks to charge some fees, if any, on these prepaid cards?