Those who receive Social Security likely aren’t in a position to give their money away. That’s why there is a plan on the table to eliminate paper Social Security checks entirely. The Treasury has plans to phase the checks out by 2013 and send funds via direct deposit and prepaid debit cards, writes The Wall Street Journal. The intention is to save taxpayer dollars and make benefits more secure. Sadly, big banks like Wells Fargo couldn’t leave well enough alone; consumer groups fear they’ll market their own high-cost cash till payday loans to Social Security customers at an even more frenetic pace.
Banks set their sights on fixed income customers
According to the National Consumer Law Center, these new cash advance-like products are drawn from customers’ Social Security benefits as collateral. These personal loans can be requested from the bank via telephone or online. The bank takes the cash loan money out of the consumer’s next receipt of benefits. If the loan isn’t paid in full within 35 days, the bank automatically withdraws the amount owed, frequently producing overdraft and a morass of fees.
Making up for lost revenue by siphoning from baby boomers
As the latest Wall Street reform bill approaches law status, banks fear the effect the loss of automatic overdraft loans could have on their bottom line. The National Consumer Law Center believes this may be a big reason why these larger banks are aggressively pushing pay day products to Social Security recipients. Banks have squeezed their Social Security customers to the tune of $ 700 million in benefits each year for overdraft fees.
Want an choice to banks fingering your Social Security?
The Wall Street Journal addresses the other disbursement option: prepaid debit cards. Costs are low and the cards are FDIC insured. Use them like ATM cards for buying and paying bills.
More info on this topic
online.wsj.com/article/SB10001424052748704875004575375474092141764.html
en.wikipedia.org/wiki/Social_Security_%28United_States%29
