Michigan and other states began cutting costs a few years ago by offering unemployment insurance and other benefits on debit cards. Even the Social Security Administration has a Direct Express debit card.
The plastic can be easy to use at ATMs, stores and the like. And the debit cards for jobless benefits can be especially helpful for laid-off workers who do not have bank accounts.
But the cost-cutting and convenience of the cards comes with a price. Like other types of plastic, government benefit debit cards can carry plenty of ridiculous, ding-you-when-you're-down fees.
U.S. Rep. Sander Levin, a Royal Oak Democrat, has introduced a bill called the Benefit Card Fairness Act that would set limits on some fees connected to government-benefit debit cards. Some states -- thankfully, not Michigan -- require that jobless workers receive their benefits on a debit card. Levin's bill would require that beneficiaries be given a choice of receiving benefits via debit card or direct deposit.
Keeping the costs of convenience down
I've never liked any fees tied to plastic. So, it should come as no surprise that I take any opportunity I get to grumble about the long list of fees attached to the debit cards issued to people drawing unemployment benefits in Michigan.
A dollar to check your balance at an ATM? How exactly do you know if you've got $25 left to buy gas?
Sure, there's no fee for the first inquiry at a Chase/Allpoint ATM each time benefits are added to your card. (You also can avoid a fee by checking the balance amount via the Internet or by telephone.)
But why should you have to pay anything ever to see how much money is left?
I began criticizing these fees last summer as the jobless rate soared -- even though Michigan's card reportedly isn't the worst.
Now the Benefit Card Fairness Act, introduced last month by U.S. Rep. Sander Levin, a Royal Oak Democrat, would put a stop to some ridiculous fees on all government benefit debit cards -- including a ban on all fees for balance inquiries.
Levin's bill also would:
While such fees are not assessed in Michigan, "some people do get charged for calling customer service" in other states, said Michelle Jun, staff attorney for Consumers Union in San Francisco. Other states also may restrict the number of free calls and then charge 50 cents or $1.25 a call.
Many people drawing benefits in Michigan avoid the fees by using direct deposit if they have a bank account. A few states don't offer such an option, but they would have to under Levin's bill.
Not surprisingly, again, people who aren't getting a regular paycheck don't like the fees that can eat into their limited benefits, either.
"Whatever we get, we're grateful for and we don't want to spend it up in service fees," said Bradly Vaughan, 48, who was out of work about nine months last year.
Vaughan, who lives in Ray Township and now has a job as a truck driver, said he agreed to get his jobless benefits through the Michigan debit card because he did not have a bank account.
His solution to avoid fees: He withdrew all the jobless benefits from the card each time money was added. The Michigan card has no fee for the first withdrawal by teller each time benefits are added but additional bank teller withdrawals are $4 each.
To get the free withdrawal at a teller, you'd need to go to a Chase bank or a participating bank or credit union that displays the Visa logo.
"Sometimes you can't get to the bank that issued the card," Vaughan warned.
But again, should you be required to analyze fee charts when you're out of work? Or could you use that precious time to look for a job?
If you're out of work, all those fees easily can look like a money grab -- and one more way to kick people when they're already down.
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