Social Security Checks Going Debit

Posted by Mark Brousseau

The move toward electronic payments has now impacted Social Security checks:

Social Security checks now offer debit card option
By Kathy Chu, USA TODAY

For millions of Americans, accessing their Social Security benefits is now just a card swipe away.

A new debit card being offered by the Treasury Department gives nearly 4 million recipients who have no bank accounts an alternative to paper checks that they must cash, usually at a price.

The new debit card, issued by Comerica Bank, was quietly marketed to nearly 3.5 million recipients of Social Security and Supplemental Security Income this spring. It's now available to any benefit recipient via usdirectexpress.com.

States already load child support payments and unemployment benefits onto debit cards. The federal government has used prepaid debit cards, too, for disaster relief aid. But the Social Security debit card is the largest push to date to switch from costly paper checks to electronic payments.

"Our goal is to move to 100% electronic payments," says Judy Tillman, commissioner of Treasury's Financial Management Service. "It's safer and more reliable for delivery" of funds.

The new debit card will eliminate the need for consumers without bank accounts to use costly check-cashing services, the Treasury Department says. It will also save the government money. The Treasury estimates that if all 4 million recipients without bank accounts signed up for the card, it would save $42 million a year.

As with any other debit card, using it won't always be free. For instance, holders typically will get one free ATM withdrawal per month. After that, they'll be charged 90 cents for each withdrawal. A fee of 75 cents per month also applies if card holders want paper statements mailed to them.

Still, the fees are among the lowest in the industry for such services, says Nora Arpin, director of government electronic solutions for Comerica.

About 80% of the 57.3 million Social Security and SSI recipients already have their benefits directly deposited into their bank accounts. The challenge will be to get the remaining consumers to switch from checks to electronic payments such as direct deposit or the new debit card.

The card "might be confusing if they're not savvy about electronic payments and don't have (experience with) a bank account," says Chris Allen, a director for Hitachi Consulting.