Mike the Mad Biologist

A while ago, I discussed how the battle over credit and debit fees is really a battle over how much money should cost and whom you’re paying that cost to: corporations or government. Well, the corporate takeover of the monetary base continues unabated, this time affecting Social Security. You see, in the name of efficiency, the Social Security Administration is moving to direct deposit, whether you like or it not. So what’s the problem with that? Well, there are some interesting…features (italics mine):

If you click on the “About the Direct Express Card” link, the second paragraph says:

There are no sign-up fees, monthly fees or overdraft charges. No bank account or credit check is required to enroll. Cardholders can make purchases, pay bills and get cash at thousands of ATMs and retail locations.

So far, so good. But here’s the last sentence in that paragraph:

Some fees for optional services may apply.

Oh, some fees — okay! Now scroll down a bit and check out the fine print (which is probably too fine for a lot of older people to read). You’re allowed one (as in ONE!) free ATM cash withdrawal for every payment you receive each month. After that, you will pay 90 cents per withdrawal.

But wait … there’s more. Even the first “free” withdrawal is only free if you use “one of the more than 50,000 surcharge-free network ATMs.” And that’s just the tip of the iceberg. There are other fees for everything from requesting a paper statement (75 cents) to transferring your own money to your own bank account ($1.50).

That’s right, we’re charging old people dependent on Social Security and who are often living close to the bone user fees to access their Social Security payments. Actually, we is not the correct pronoun–MasterCard is.

I’m sure the efficiency goobers can make the case that this will save money, but sovereign governments should not give private corporations the power and prerogative to charge people for access to their government pensions.

I’m starting to think Louk had the right idea.

Related: The details are unclear, but California has shifted its aid distribution over to a system run by Bank of America. It does appear that claimants will have to use Bank of America to avoid fees.

Comments

#1 Lindig Harris
July 24, 2011

I’m confused. I get SS by direct deposit and it goes immediately into my bank account. It seems that what you’re discussing is some kind of loadable debit/credit card — is that right? Are you saying that the SS is going to do away with direct deposit into bank accounts and only have the loadable cards?
#2 Lyle
July 24, 2011

This is an attempt by SS to completly do away with the checks, for folks that do not have bank accounts. Similar to what is done for welfare. (A lot of lower income folks don’t for one reason or another have a bank account). The idea is that with paper checks, one had to pay a check cashing place to cash the check, for Example Wal-Mart charges $3 to cash a check. So the comparison is to the fees charged for using paper checks, as most banks will not cash a check for a non-customer, due to forgery issues.
#3 Mike
July 24, 2011

What odd framing in the OP. The question is should people pay private companies for services rendered or should people receive those services for free. To my knowledge, most government payments to people require conversion into currency. This conversion can be done at a bank with which a person has a business relationship or at businesses which charge a fee for check cashing.

From a government expense standpoint, writing and sending physical checks is very expensive compared to digitally transferring payments through direct deposit to bank accounts or debit card accounts.

The OP is seemingly just looking to find something to rant about.
#4 Tony P
July 24, 2011

The state of RI moved it’s unemployment benefits to Chase a few years back and it has similar fees.
#5 william e emba
July 24, 2011

This has also been done with unemployment in many states for some years now. Google “unemployment direct deposit”, and see what alternatives are offered. Wisconsin, for example, still uses checks. Pennsylvania and New York issue debit cards.

I agree with the other posters. I really can’t see what the possible downside is whatsoever.
#6 Vene
July 24, 2011

*read blog post*
*reads comment 3 by Mike*
lol wut
#7 Bob
July 25, 2011

Mike the Mad Biologist is absolutely right. And there are even more downsides to this than the fees he mentions. Yes, direct deposit will still exist, along with the debit card option, as a means by which Social Security benefits will be conveyed to recipients. However, despite any claimed savings by the government for only providing benefits by electronic means, the biggest cost is elimination of the paper check for those who desire it.

It’s not just the unbanked or those who rely on check cashing services who have received paper check payments from the government. There are plenty of people who trust a paper check more than some electronic transfer, and that trust, and choice of receiving a paper check, should be respected and honored.

What Treasury has done is tell some 15% of benefit recipients, about 6 million people, that their preference means nothing and their choice is inconsequential, and they no longer deserve to have that choice.

More than 1/3 of all households in the U.S. do not have internet access and thus have to find an alternate means of determining if the direct deposit of benefits took place. In addition to the fees associated with the debit cards, not everyone wants or needs one.

The move by states to pay all benefits electronically, coupled with similar action at the federal level, and
Treasury’s recent decision make sales of savings bonds electronic-only as of January 1, all increase the likelihood of a crippling cyberattack on our nation’s currency, with catastrophic consequences resulting.

My comfort level involves cash and checks. If you like electronic money, more power to you. That’s your choice. But I resent any government agency taking my choice away from me.
#8 Rob Monkey
July 25, 2011

Bob, it ceases to be your choice when it involves everyone’s money (taxes). Don’t get me wrong, I’m a complete supporter of SS, but it should keep up with the times. You would have to make some pretty good arguments to convince me that a paper check is in any way nearly as secure as an electronic card, and reducing the chance of someone’s SS money being stolen is a good thing IMO. As far as your fear of cyberattacks, well they would affect the very same accounts that your paper check is coming from, so it’s not like you have any additional security by having a piece of paper instead of an electronic account. Regarding the internet access thing, it’s a good point until you realize that every single bank I’ve ever heard of has both automated and staffed phone centers that you can do all of your transactions through, and you can check your balance in about 60 seconds.

As far as fees go, it’s a standard fee that applies to nearly every transaction in this country. I pay more than that if I want to take money out of an ATM using my credit card, but here’s the big thing: I don’t have to use cash if I don’t want to. These cards aren’t going to charge you money to use them at a store, only if you want to take cash out of an ATM. Sorry, but that’s a pretty minor inconvenience (or really it’s more convenient than using cash).

Sorry Bob, but I can’t see a single argument you make holding any water. You remind me of my dad, who didn’t get a cell phone for years because he didn’t want the fancy new technology. Then he realized that I hadn’t paid a long-distance charge in years, and I could call my brother in CA for the same price as calling him down the street. I’ve been trying to get him around to credit cards, but it’s the same story. Maybe when I show him the several hundred dollars in Amazon giftcards I get through rewards programs he’ll come around . . .
#9 galatatour
July 25, 2011

This has also been done with unemployment in many states for some years now. Google “unemployment direct deposit”, and see what alternatives are offered. Wisconsin, for example, still uses checks. Pennsylvania and New York issue debit cards.
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#10 Bob
July 26, 2011

I have so many responses, Rob Monkey.

Social Security *has* kept up with the times. It provided paper check, direct deposit, and debit card payment options. People selected the option that made the most sense to them. As I pointed out, some 6 million people have continued to select the paper check option. Since it appears you do not see the need to validate their choice, I hope you will never be placed in a position of having a choice you oppose being forced upon you—whether it involve Social Security or anything else. And should such an unwanted choice be imposed upon you, will you be so willing to accept it?

As to security, I am unaware of any system which is totally safe and unable to be compromised. Therefore, each person should be allowed to choose the system with which he/she is most comfortable and finds the most secure. Your mileage may differ, but I find cash and checks to be the most secure. If you like electronic cards, think they are secure, and don’t care if every purchase you make on them is able to be tracked by the vendor and possibly sold to a third party as well as be susceptible to hacking, it’s fine with me. I like the anonymity of cash and the fact that any spending of it provides a tangible exchange of money. Either I have it in my pocket or I don’t. Checks are a fallback for moving larger amounts of money, such as for recurring monthly bills or larger purchases in stores. I feel safe with them; I don’t with cards. That’s why I don’t have (or want) credit cards, debit cards, or ATM cards.

As for checking bank balances, yes, you can call a bank call center. Personally, I don’t have time to mess around with that. Nor do I think people should have to make calls or go on-line to find out if a direct deposit has been made to their account. If the paper check has arrived in the mail, I have been paid. If it doesn’t, I haven’t. Simple and easy to figure out. And once I have the check, I can decide when, where, and how to deposit or cash it as I see fit, depending on the circumstances of the moment. Even though direct deposit can be split between accounts if the person desires, it must be set up that way ahead of time, then adhered to until the recipient decides to alter the formula. With a check in hand, the recipient can decide at that moment how to handle it.

As for the fees, by paying with cash or checks, I avoid all transaction fees. I don’t use an ATM. If I need cash, I get it from a teller at my financial institution. If the fee is a negligible inconvenience for you, and something you don’t mind paying, great. Personally, I love never having to concern myself with the possibility of incurring one.

Your dad and I would probably have a lot in common. I don’t have or want a credit card. And I don’t have a cellphone either. I don’t know your dad’s age, but I’m betting that I’m younger than he is. I also never make long distance calls. So unless you’ve got the greatest cell plan around, my guess is that my monthly landline bill is probably cheaper than what you pay. I don’t have to worry about how many minutes I use, and I never have to worry about whether I’m in a dead spot.

All of these reflect my personal choices. I’ve got nothing against direct deposit, debit cards, credit cards, or cellphones for that matter………….for those who want them.

All I ask is that I be allowed to live my life with the choices and options that have previously been made available to me, without being forced to change to something else that I don’t want or need.