Social Security Benefits to Be Paid to Some Through Use of Debit Card

On January 4^th of 2008, the Treasury Department announced that it is rolling out a prepaid debit card for Social Security recipients who do not have bank accounts. In an article posted on the Wall Street Journal Online website, it was reported that the debit cards - protected with PIN numbers and FDIC insured - will automatically be loaded with the recipient's Social Security benefits on the designated payment day. The debit card will be like most other debit cards, in that they can be used, at ATMS, retail locations and online.

Social Security recipients will include those receiving Social Security retirement benefits, as well as those eligible for Social Security disability and survivor benefits. The debit card, to be issued by CoAmerica Bank of Dallas, should be available nationwide by the end of the summer of 2008.

This debit card will make it easier for those without bank accounts to receive their Social Security benefits. It will also be a cost-savings to those now cashing their Social Security checks at check-cashing services that charge exorbitant fees. The use of the new debit card should also cut down on identity theft and the problems of forged or stolen Social Security checks. There were over 58,000 cases of forged Social Security checks in 2007.

Free withdrawals and additional benefits of the debit card will be available by using one of 56,000 ATMs designated as surcharge-free, including those operated by PNC Bank and 7-Eleven. If debit card users do not choose to use one of these surcharge-free ATMS, they will still be able to receive one free cash withdrawal per month from most ATMs, and, in general, will be charged 90 cents for subsequent withdrawals. As with most all debit cards, additional fees may be charged at certain ATMs or for certain types of transactions.

The use of the prepaid debit card will save money for Social Security recipients, but it will also save the government a great deal of money if successful. It is estimated that if the approximately 4 million "unbanked" Social Security recipients each sign up to receive the debit card, it will save the Federal government $44 million a year!

In a recent article posted on USAToday.com, it was reported that the Federal Reserve estimates that approximately one in 12 families in the United States do not currently have bank accounts, with the rates being much higher (as much as 25%) for poor and minority families. It is presumed that these statistics should also apply in general to the population of Social Security recipients. Because 9 out of 10 problems with social security benefits are tied to paper checks, this new service by the U.S. Treasury, as well as the 2005 initiative that provided for direct deposit of Social Security benefits, should go a long way toward reducing crime associated with paper Social Security checks.

CITED SOURCES:

Jeannine Aversa, "Many in U.S. don't have bank accounts", USAToday.com
Eleanor Laise, "Treasury Plans Social Security Debit Card", Wall Street Journal Online