Intro: For the unemployed, every penny counts. So, it might be surprising to learn that some state's charge fees on certain types of unemployment benefits. States looking to cut the cost of processing monthly unemployment checks are loading benefits onto prepaid debit cards. However, those cards can saddle the recipients with a multitude of different fees.
Take VO: Imagine the frustration trying to check the balance on your unemployment debit card so you don't get overdrawn and get charged a fee -- only to be charged a fee to check the balance. That scenario is played out every day in various states where the unemployed, who receive prepaid unemployment debit cards, face multiple and oftentimes poorly disclosed fees.
Take full page: According to the National Consumer Law Center, the fees associated with these debit cards are negotiated by state governments who partner with banks offering the debit cards. The costs that are not covered by the state often get passed along to the cardholders in the form of fees.
Some of the fees include:
- Denied transaction fees
- Automated teller machine fees
- Automated customer service fees
- Inactivity fees
- PIN-based transactions fees
Take SOT: Lauren Saunders, Managing Attorney - National Consumer Law Center (1:35-
"The states definitely have a responsibility to negotiate hard and come up with a good deal that can save the states money, but also works well for people who are unemployed and are really struggling with a difficult financial situation."
Continue VO: Currently, six states that use prepaid cards do not offer a direct deposit option. The National Consumer Law Center strongly urges each state to implement direct deposit as the first choice in receiving unemployment benefits and paper checks as a second option. For consumers who cannot get or have had trouble maintaining a checking account , the debit cards are a cheaper alternative to most check cashing facilities or walking around with cash in their pockets.
Take SOT: "People should feel comfortable and safe using these cards and not think that they're a minefield they need to avoid."
Continue VO: The good news is that fees are coming down and by this summer overdraft fees should be eliminated from most of the debit cards.
In the meantime, to find out what fees your state charges in prepaid debit cards, check out the National Consumer Law Center's state-by-state prepaid card programs.
Tag: To find, compare and apply for a low-cost or free checking account, visit the Checking & Savings tab at Bankrate.com. I'm Kristin Arnold.