The Treasury Department is rolling out a debit card today in 10 states so that people without bank accounts won't waste their sustenance checks on huge check cashing fees. The DirectExpress Debit MasterCard automatically loads new payments onto the card each month, so there are no checks to be lost in the mail or wasted.
In theory, it's a great idea. When check cashing fees take a big bite out federal benefits checks, they're effectively taking a big bite out of what taxpayers shell out to take care of seniors and the disabled. We don't want the people who most desperately need the money most getting gouged.
But the new system isn't totally free, either. This card comes with lots of new fees. You get one free ATM withdrawl per check. After that, it's 90 cents each withdrawl. And you have to find an ATM that's in their free networks or get hit with the bank's fee. Its network has 50,000 ATMs -- Comerica Bank, Charter One, Privileged Status, Alliance One, PNC Bank, MasterCard® ATM Alliance, and MoneyPass. Nationwide there are 360,759 ATMs as of 2007, the Bost Globe Reports. So, only about one in seven will not charge users a fee.
Seniors using the card pay 75 cents for a paper statement. (If they don't have a bank account, I'd say the odds are pretty good they don't have an email account, either.) They pay 50 cents each time they use Bill Pay. But they can use the cash back feature to avoid ATM fees.
The AARP suggests something called an Electronic Transfer Account (ETA), which is basically a low cost bank account to accept government checks. That program's been around, so the really stubborn bankless may not be wooed. Then again, they may resist the debit card, too.
Some seniors will definitely benefit from the card, which will be rolled out nationwide this summer. MasterCard stands to benefit, too, with all the processing fees it's going to get from its merchants. Those merchants are the ones going to be paying the price of the new card.
New Treasurey Dept. debit card: Friend of the bankless