Rohit Chopra, a member of the Federal Trade Commission, once served as the federal government’s student loan watchdog. Now, he’s preparing to take on a bigger role—the federal government’s watchdog [...]
What is a payroll card?
While employers used to only pay by check or direct deposit into an employee’s bank account, some are embracing new technology and using payroll cards instead. The employee’s salary is loaded onto a plastic card similar to a debit or credit card.
A payroll card works the same way a debit or credit card or debit card does and is issued by the same payment processors that issue credit cards such as MasterCard and Visa.
Payroll cards are accepted anywhere these credit cards are accepted. Once your employer issues you a payroll card, your salary is loaded onto it each payday, meaning you don’t have to get a new card each pay period.
In this way, a payroll card is similar to a prepaid card. You can get cash from your card by taking it into a bank and telling the bank teller how much money you want, much like getting a cash advance from of a credit card.
Employers can’t require you to use a payroll card instead of check or direct deposit. If you do use the card, there are typically no fees to use it, aside from potential ATM surcharges if you use your card to get cash at one of these machines. This is a charge from the owner of the ATM, not from the card or your employer.
However, you may have to pay to replace your card if you lose it or it gets damaged. While there’s typically no charge for basic use of the card, there may be fees for specific actions, such as a fee for making more than a certain number of transactions in a single pay period, a fee for not using it for an extended period, and in some cases, even a fee to load the card or a monthly fee for having the card.
Thinking of choosing a payroll card? Here are three questions to ask first.
Payroll card example
If you choose a payroll card, you can use it directly at the register of any store, just like you would when making purchases with your credit card. Because some companies charge for making multiple transactions in a pay period, you can simply get all or some of the cash off the card by taking it into a bank or going to an ATM, and using the cash as you need it.