Back in January the U.S. feds announced that by summer they will begin distributing funds to Social Security recipients using prepaid debit cards instead of checks. They have chosen Dallas-based Comerica Bank to be the card issuer, making one wonder what kind of grease that took for them to get the gig. The idea, mainly targeted towards people who don’t have a bank account, is being touted as a significant cost savings for the recipients and the government. Each recipient would be issued a card and each month money would be loaded onto the card.
But there are some real costs in the new system, especially to the recipients. Although the first withdrawal is free, each one after that will cost .90 cents. Also, many ATM’s, especially in Mexico, levy a charge to use the machine. If you want a paper account statement it will cost .75 cents, and to pay bills online will be .50 cents each. And there is a $3.00 fee on international currency exchanges, again affecting those in Mexico. If you lose your debit card? They usually don’t carry the protection that credit cards do.
Maybe this new system will be an improvement, but I would weigh the cost against the benefits very carefully. Based on past performance of the corporate-giveaway present administration, I’m thinking that the bank stands to be the real winner in this deal. If I were a senior collecting S.S., I would opt for direct deposit into an free senior checking account. Clearly, not all new ideas are good ideas.