Avoid Fees on Unemployment Benefits Debit Cards

The headline said ”Banks Profit from Unemployed Customer”. Well, duh. That is what banks do, if they can. Banks aren’t selective. They profit from the employed and unemployed alike. Except in this case, the customer is the state. The state has the contract with the credit card company in order to use their services to distribute unemployment benefits.

At this time 30 states have agreements with financial institutions to process state funded debit cards managing unemployment benefits. “The Department of Labor allows the fees as long as states create a way for recipients to get their money for free”, spokeswoman Suzy Bohnert said. When the benefits card is issued guidelines for its use is also given.

“If you use your card the right way, you’re not going to pay fees at all,” said Paul Simpson, Citigroup’s global head of public sector, health care and wholesale cards.

I would truly like to see that. Every state should save hundreds of thousands to millions of dollars in administrative costs. The unemployed should understand and avoid paying fees on the benefits cards. Unfortunately, in the article, Paul Simpson did not elaborate and explain the “right way” to use the card so that you would not pay fees.

I can not provide all the information for every state. Apparently some of the “right” ways to use the benefits cards are:

Make a single one time cash withdrawal from an approved teller machine or inside an approved bank.
Use the card at point of sale to pay for purchases.
Keep track of your own balance and do not overdraw the card.
Use free online services and do not exceed the free contact with the issuer.
Read the literature provided by your state.

Try to make the credit card companies lose money by not incurring fees for the cards’ use.