paper checks

Bucks Blog: Improvement Seen in Prepaid Cards for Jobless Benefits

January 30, 2013 by NewsMaker Leave a Comment

Many states have made progress in reducing fees that can eat away at unemployment benefits delivered on prepaid debit cards, a report from the National Consumer Law Center finds.

But five states still do not offer jobless workers the option of having their benefits deposited directly into a bank account, which the center says violates federal law.

Changes since the center’s first report on the issue in 2011 have saved unemployed workers millions of dollars in fees over all, the center says. Eighteen states have reduced card fees for A.T.M. withdrawals and purchases, and just three cards get a “thumbs down” from the center in the new report, down from 16 in the initial analysis.

But there is still room for improvement, since many cards still carry fees that out-of-work Americans can ill afford, said Lauren Saunders, managing lawyer at the center and an author of the report. Some states make it hard to find out just what fees are charged, and under what circumstances.

“There are still too many fees,” she said, citing instances in which workers must pay to check their balances and contact customer service, even if they do not speak with a live representative. Well-designed prepaid cards are safer, cheaper and more convenient than paper checks, she said, but direct deposit to a bank account of the recipient’s choosing is still the best option.

Practices and fees vary because jobless benefits are distributed at the state level, and each state negotiates terms with card companies.

Roughly 5.7 million people were receiving unemployment assistance as of Jan. 5, according to federal data. (The unemployment rate stood at 7.8 percent at the end of 2012, with 12.2 million people out of work.)

The report found the ease of signing up for direct deposit of unemployment benefits varies. Some states encourage workers to sign up for direct deposit as the first choice, while others automatically enroll them for prepaid cards and make them take extra steps to unenroll from the cards and enroll in direct deposit. While prepaid cards, in general, are often used by people who lack conventional bank accounts, unemployed workers previously received a paycheck, so many are likely to have a bank account available, Ms. Saunders said.

Minnesota had the highest direct deposit rate, at 82 percent, while Arizona had the lowest, at 16 percent.

California, Indiana, Kansas, Maryland and Nevada do not offer the option of direct deposit, even though federal law requires them to do so, the report says. In California, Kansas and Maryland, workers can set up automatic transfers from a card to a bank account, but fewer than a quarter do so — perhaps because it results in a delay of one to four days in getting their money.

U.S. Bank, the only bank that charged overdraft fees in the previous survey, has eliminated them. Pennsylvania made changes to its card program that have saved unemployed workers more than $5 million.

As a result of the changes, Pennsylvania’s card, issued by JPMorgan Chase, joined top-ranked cards in California and New Jersey, both issued by Bank of America. The three cards earned “two thumbs up” from the center because they offer benefits like free in-network A.T.M. withdrawals and lack “junk” charges, like inactivity fees.

The three states receiving a “thumbs down” for their cards were Alaska, Indiana and Iowa.

Do you receive unemployment benefits on a prepaid card? What has been your experience? Do you feel the fees are excessive?

Article source: http://bucks.blogs.nytimes.com/2013/01/30/improvement-seen-in-prepaid-cards-for-jobless-benefits/?partner=rss&emc=rss

Filed Under: Your Money Tagged With: direct deposit, jobless workers, paper checks

Bucks Blog: ING Direct’s Paperless Account Now Offers Paper Checks

August 18, 2011 by NewsMaker Leave a Comment

Even as payments become increasingly electronic, the need for paper checks persists. Just ask the folks at the online bank, ING Direct, which touts its Electric Orange checking account as “paperless” — but which just began offering its customers the option to use, well, paper.

Todd Sandler, the bank’s head of product strategy, said the bank wasn’t encouraging the use of paper checks. “Our hope is that paper checks go the way of the abacus,” he said.

But some smaller merchants and local groups — your local parent-teacher association, for instance — still don’t accept debit card payments, so even bank customers who are very technology savvy sometimes need to get out the pen and checkbook.

The paper-check option, Mr. Sandler says, was a missing element holding some customers back from ditching other bank accounts and using ING Direct alone. So last week, it began offering its customers the option of ordering paper checks. (Mr. Sandler said the change isn’t related to the deal for Capital One to acquire ING Direct.)

“Our customers don’t want paper checks,” he said. “But they actually need them.”

A recent Federal Reserve study found that check payments declined 7 percent between 2006 and 2009, while the use of debit cards rose by 15 percent. Checks now comprise less than a quarter of all non-cash payments, the study said—but that still means billions are used each year.

ING Direct already offered a “mail a check” option, for recipients who don’t accept electronic payments. This allows customers to log on to their ING Direct bank account and fill in payment information electronically. The bank then mails a check to the recipient.

Now, ING Direct customers can buy their own checks from the bank, at a cost of $5 per book of 50 checks. The bank has added some security features to make the use of paper checks more secure, he noted. For instance, when customers receive their checkbook, they must go to their online account and activate the checks—much like the process for activating a debit card. That, Mr. Sandler says, assures that no one can fraudulently order checks with your account number.

And yes, now that it offers paper checks, Electric Orange will also charge bounced-check fees. But the fee is just $9 —a fraction of the $35 fee typical at most large banks. The fee is charged if the check exceeds the account’s available balance, including its available overdraft line of credit.

What bills do you still pay using paper checks? And would you stop if the biller would accept some other form of payment?

Article source: http://feeds.nytimes.com/click.phdo?i=bd98a7e57c373039f89ac6687e24c684

Filed Under: Your Money Tagged With: debit cards, paper checks, product strategy