Social Security Goes Electronic

Posted by Mark Brousseau

An interesting article from The Philadelphia Inquirer:

Social Security offering a debit-card option
By Harold Brubaker
Inquirer Staff Writer

Social Security recipients who receive paper checks because they do not use banks have a new way to get their money.

The U.S. Treasury Department said yesterday that it would begin pitching its new Direct Express debit card to 2.4 million beneficiaries from Maine to Virginia. Information about the card will come with this month's checks.

These recipients include nearly 250,000 people in Philadelphia and surrounding counties in Pennsylvania and about the same number in New Jersey.

"You can easily use this card to manage your money every month with no fees," said Judith R. Tillman, the commissioner of the department's Financial Management Service.

The card is designed to prevent lost checks, thwart check thieves, and save cashing fees that average $6 per check, she said.

Most Social Security recipients receive benefits by direct deposit into their bank accounts. Those without bank accounts typically use check-cashing firms.

The debit cards, issued by Comerica Bank of Dallas, allow users to track their spending at no charge on a Web site or through an automated telephone line. It costs 75 cents a month to get a paper statement. The system will not allow a card user to withdraw more than the available balance. That means there are no overdraft fees, which bedevil many elderly bank customers.

"It seems like a pretty good product," said Leslie Parrish, a senior researcher in the Washington office of the nonprofit Center for Responsible Lending.

"It eliminates the need to go to a check casher, but it also has a leg up on regular bank accounts if people are worried about overdrafting through a debit transaction," she said.

Tillman said her agency sends 489,000 Social Security and Supplemental Security Income checks to Pennsylvania every month, including 241,000 to Philadelphia and the surrounding area. In New Jersey, the figure is 263,000. She did not have a breakout for South Jersey.

If all four million people nationwide who receive Social Security or disability benefits but do not have bank accounts were to sign up for the debit card, taxpayers would save $42 million a year, said Tillman, a graduate of Glassboro State College, now called Rowan University.

The Treasury sent 59.1 million Social Security and disability payments in May. All but 10.5 million of them were deposited directly into bank accounts. The debit card is available to anyone who receives those benefits.

Social Security and Supplemental Security Income recipients may sign up for the card by calling toll-free 1-877-212-9991 or visiting www.USDirectExpress.com.