Page 32 - GS230702

Education

Treasury's Direct ways come at a cost: Fees allowed for

check cashing vary by state, but fees
Express Card of 2 percent to 5 percent are common.

program saves Over time, that expense takes a toll:
A 2022 report from the nonprofit
Financial Health Network (https://
Americans millions tinyurl.com/bde8j6fe) estimated that
Americans paid $1.5 billion in non-
bank check cashing fees in 2021.This
By Andrew Gillen doesn't account for the cost and in-
convenience of traveling to the check
Mastercard cashing location, the risk associated
with carrying cash, and other issues
few months ago, the Social Security Administration announced of convenience and safety.
that benefit recipients would receive an 8.7 percent cost of living
adjustment (COLA) in 2023, the largest COLA in 40 years. Congress Fortunately, alternatives exist. For
A ablished automatic COLAs for Social Security benefits during recipients of federal government ben-
t
s
e
the economically tumultuous 1970s. Previously, benefits were increased only efits, for example, the U.S. Depart-
by a special act of Congress. ment of the Treasury offers the Direct
Express prepaid debit card. While the
The 2023 COLA will help millions of benefit recipients meet the increasing Direct Express card is intended pri-
cost of living. However, federal benefit payees who rely on check cashing will marily for the unbanked, it's available
discover that higher benefit checks often lead to higher check cashing costs, to any recipient of federal benefits.
with fees that can be as high as 3 percent or more to cash a government check. Direct Express gives beneficiaries a
way to receive payments automati-
For Americans without a bank account, check cashing businesses have histori- cally and electronically each month.
cally provided a way to convert paper checks into cash, but this service has al-
Sign up for the Direct Express card
is free, and there are no monthly
account fees. For safety and conve-
nience, customers can check account
balances by ATM, phone or mobile
app. Direct Express charges no fees to
make purchases in stores, online or
via telephone. Cardholders are enti-
tled to one free ATM cash withdraw-
HOLIDAY PAYMENT al for every federal benefit deposit to
their card accounts, and they can ac-
SOLUTIONS cess more than 95,000 surcharge-free
ATMs across the country.

The few fees Direct Express cardhold-
ACH • LEVEL III • EMV ers encounter are for optional servic-
es such as receiving paper statements
WEB • RECURRING via mail or transferring funds to a
personal bank account. In general,
however, Direct Express is very low-
CASH DISCOUNT cost, and it's possible to use the card
for free.
CUSTOMER DATABASE In its recent report to Congress on
government-administered, general-
use prepaid cards (https://tinyurl.
C A L L F O R A D E M O com/2znm48jy), the Fed confirmed the
8 0 0 - 2 9 6 - 4 8 1 0 low cost of government benefit cards
such as Direct Express, noting that "[t]
otal cardholder fee revenue received
by issuers of [such] prepaid cards. . .
remained constant, representing 0.1

32