News & Information

CCH® UNEMPLOYMENT INSURANCE — 7/9/08

U.S. Treasury introduces prepaid debit card for Social Security payments

The U.S. Department of the Treasury's Financial Management Service (FMS) has announced that a prepaid debit card for Social Security payments and other federal benefits is now available. The Direct Express Debit MasterCard® card —designed as a safe, convenient alternative to paper checks that people without bank accounts may choose —is currently being introduced in 10 states, and will be rolled out nationwide this summer.

"People without bank accounts now have a user-friendly, practical alternative to paper checks for their monthly federal benefit payments,” said FMS Commissioner Judith Tillman. “We know that many check recipients are eager for a card-based option for their federal benefits, and we are confident the Direct Express card will provide many Americans an important entry point to the financial mainstream."

Card provides another option for those without bank accounts

The prepaid card provides another option to choose from for federal beneficiaries who do not have a bank account, but are looking for a no-cost or low-cost alternative to using check cashing facilities and carrying large amounts of cash. Unlike other prepaid debit cards, the Direct Express® card offers cardholders free access to their money. There is no sign-up fee, and no bank account or credit check is required to enroll. Cardholders can make purchases, pay bills and get cash at thousands of ATMs and retail locations.

Dallas-based Comerica Bank will issue this nationally available card exclusively for payment of federal benefits. Comerica currently coordinates 25 debit card programs for 13 states, servicing more than two million cardholders. People currently receiving Social Security or Supplemental Security Income (SSI) checks in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, Oklahoma, South Carolina and Texas already have received information about the card. People may sign up for it by calling toll-free 1-877-212-9991 (TTY 1 (866) 569-0447) or visiting www.USDirectExpress.com.

Advantages of the Direct Express® card

About 4 million Social Security and SSI recipients do not have bank accounts and thus have had to depend on paper checks for their monthly payments. The Direct Express® card offers a number of features:

• Safety: Paper checks can be vulnerable to financial crimes such as check fraud or delivery delays due to weather. The Direct Express® card eliminates the risk of lost or stolen checks, and gives people access to their money without needing to carry large amounts of cash. Cards are FDIC-insured up to the maximum amount allowed by law, and offer a Personal Identification Number (PIN) for use at ATMs and retail locations. If a card is lost or stolen, it will be replaced.
• Absence of fees. Features built into the Direct Express® card are aimed at reducing or eliminating the cost of using the card. There is no cost to sign up for the card and no monthly fee. While there are fees for some optional transactions, it is possible to use the card for free. For example, cardholders can get free cash back with purchases at retail locations, or free cash withdrawals through bank or credit union tellers. Cardholders also receive one free ATM cash withdrawal in the United States for each benefit payment deposit posted onto an account (ATM owner surcharges may apply at ATMs outside the network).
• Convenience. Cardholders will be able to make purchases at no cost wherever Debit MasterCard® is accepted and use the card to pay bills and get cash at ATMs. Cardholders also get free balance information at ATMs, by phone or online; free optional notification of deposits to the debit card by phone, email or text message; free optional low balance alerts when the account balance falls below a certain level; and round-the-clock access to the toll-free customer service number and web site.
• Instant access. Unlike paper checks, which are vulnerable to risk of theft, loss or delivery delays, benefit payments for the Direct Express® card are automatically deposited into card accounts each month, so cardholders don't have to wait for the mail to access their monthly payments.

Program could save millions of dollars

The FMS states that while it costs the U.S. government $.98 to issue each check payment, it costs only $.10 to issue an electronic payment. Taking into account the 4 million beneficiaries that currently lack a bank account and who are receiving paper checks, there is a potential gross savings of $3.52 million dollars with a switch to a debit-card system for benefit payments. FMS provides central payment services to federal program agencies, operates the federal government's collections and deposit systems, provides government-wide accounting and reporting services, and manages the collection of delinquent debt.

Visit our News Library to read more news stories.