Are Banks Making Money Off Unemployment Benefits?
If there’s a justification for the biggest welfare queens in history subsidizing their losses on the backs of people their incompetence and greed helped place in the unemployment line I’m not seeing it. Probably because it doesn’t exist!
First, Arthur Santa-Maria called Bank of America to ask how to check the balance of his new unemployment benefits debit card. The bank charged him 50 cents.
He chose not to complain. That would have cost another 50 cents.
So he took out some of the money and then decided to pull out the rest. But that made two withdrawals on the same day, and that was $1.50.
For hundreds of thousands of workers losing their jobs during the recession, there’s a new twist to their financial pain: Even when they’re collecting unemployment benefits, they’re paying the bank just to get the money — or even to call customer service to complain about it.Thirty states have struck such deals with banks that include Citigroup Inc., Bank of America Corp., JP Morgan Chase and US Bancorp, an Associated Press review of the agreements found. All the programs carry fees, and in several states the unemployed have no choice but to use the debit cards. Some banks even charge overdraft fees of up to $20 — even though they could decline charges for more than what’s on the card.
Is your blood boiling yet? No? Then keep reading.
Making money on interest
Some banks, depending on the agreement negotiated with each state, also make money on the interest they earn after the state deposits the money and before it’s spent. The banks and credit card companies also get roughly 1 percent to 3 percent off the top of each transaction made with the cards.“It’s a racket. It’s a scam,” said Rachel Davis, a 38-year-old dental technician from St. Louis who was laid off in October. Davis was given a MasterCard issued through Central Bank of Jefferson City and recently paid $6 to make two $40 withdrawals.
Neither banks nor credit card companies will say how much money they are making off the programs, or what proportion of the revenue comes from user versus merchant fees or interest. It’s difficult to estimate the profits because they depend on how often recipients use their cards and where they use them.
But the potential is clear.
In Missouri, for instance, 94,883 people claimed unemployment benefits through debit cards from Central Bank. Analysts say a recipient uses a card an average of six to 10 times a month. If each cardholder makes three withdrawals at an out-of-network ATM, at a fee of $1.75, the bank would collect nearly $500,000. If half of the cardholders also call customer service three times in any given week, the bank’s revenue would jump to more than $521,000. That would yield $6.3 million a year.
(h/t msnbc)
Banks have learned nothing, and why should they since we keep rewarding their failure. I’m telling you, nationalizing the banks looks better and better.
Tags: Banks, The Economy, Unemployment Benefits
Are you allowed to refuse the card and insist on a check?
The article says that in several states the unemployed have no choice but to use the debit cards
Double irony points if these people are collecting unemployment because they were laid off from a bank.
Schadenfreude points if they supported Republicans because their boss told them it would be good for the bank (MBNA workers I am talking to you!)
I think the Federal law states that there must be a way to get your money for free, and the banks meet that – barely – by letting you have one free withdrawal. But I am sure most people don’t know about that, and the banks are cashing in on the ignorance.
Worse, unemployment benefits are also taxable (Thanks, Ronald Reagan!) ARRA suspended the taxes for the first $2400, but that means after the first 12 weeks or so you will get an unpleasant surprise in your check.
Banks make more off of their fees than any other source of income that came out of the WNJ a few months ago
God forbid you mess up a personal account and get it corrected the same day the overdraft fees would pile on to no end because of the way they jerrmander how debits are paid 1 mistake could turn into 5 or 6 fees totaling hundreds of dollars
BTW don’t over draw your unemployment card that could cost 20 dollars
Shame on these state agencies that negotiated these deals to let banks continue their fees rip off on unemployment benefits. No doubt that these transactions have a cost, but they are closer to 2 cents than 2 dollars.
Schadenfreude points if they supported Republicans because their boss told them it would be good for the bank
Wrong these changes took place after Democrats took control of many states. This is an outrage. The states could use direct deposit if they want to save money on checks. Most of the unemployed have bank accounts.
Are used car salespeople, making a comparatively honest income, STILL at the bottom of the ‘trust’ pile?
Hey…I used to sell cars for a living. There are a lot of small employers doing this also. I believe that most states allow for either direct deposit or debit cards, but anon is right. 1 free withdraw per pay cycle.
Are these debit cards accepted at strip joints and liquor stores like the ones FEMA handed out? Sounds like time for some crack investigative journalism!
Are these debit cards accepted at strip joints and liquor stores…
What part of “stimulus” do you not understand?
G Rex, I assume by your statement that you’re all for limiting bankers’ executive pay.
(anon, excellent point.)
Hmm, trying to connect the dots there…bankers have resorted to stripping?
Hmm, not answering my question. Just looking for some consistency!
Now were all getting it. Its a Banker problem. And who helped the Banks and Credit Card companies in Delaware? The three blind mice, Carper Biden and Castle.
At least 25 states are claiming soverign rights in this country. When will Delaware legislators even look into that issue. I will bet that 98% don’t even know about it.
As to your question of the day, who won the election in November. It was the radical right of the democratic party. The blue dogs.