These cards can be convenient and less costly for people who don't have a bank account, and they can save states money. But those benefits come with a dozen different fees that ding the unemployed if they utilize a variety of banking services when they tap their jobless benefits.
A recent report by the National Consumer Law Center (NCLC), a nonprofit organization that advocates on behalf of low-income people, found that:
• Prepaid unemployment compensation cards in 22 states charge fees at network automated teller machines, or ATMs, and cards in all 50 states charge a fee at out-of-network ATMs, in addition to ATM surcharges.
• Cards in 28 states charge inactivity fees.
• Cards in 24 states charge ATM balance-inquiry fees.
• Cards in 16 states charge for calls to automated customer service menus.
• Cards in five states charge overdraft fees of $10 to $20.
• Transactions that use a personal identification number, or PIN, live customer service calls and withdrawals assisted by a bank teller can also trigger fees in some states.
• Only three states offer a choice of a paper check, direct deposit or prepaid card.
• Six states that use prepaid cards don't offer direct deposit as an option.
The report singled out the overdraft fees on U.S. Bank-issued cards in Arkansas, Idaho, Nebraska, Ohio and Oregon as being "especially problematic."
Cards issued by JP Morgan Chase in Tennessee were cited as having the most "junk fees," including ATM, PIN debit, denied transaction and balance inquiry charges.
California and New Jersey were lauded as having the best unemployment compensation cards, issued by Bank of America. California lost a point for not offering direct deposit as an alternative, however.
The typical unemployment compensation check, according to the NCLC, is only $294 a week, barely a third of the average wage.
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