Social Security's Paperless Transition

As of May 1, new applicants for Social Security benefits will not be able to receive paper checks. The move is part of Social Security's gradual transition from paper checks to electronic banking, which will save the government about $1 billion over 10 years. The transition, which will be completed by March 2013, will also save 12 million pounds of paper in the first five years. But some people, like the commenters at Consumerist, have raised questions about whether the switch to direct deposit (or Visa-branded debit cards) will actually cost users.

It seems these concerns have some merit to them. Just a quick look at the Social Security site reveals that SS debit card users can be charged fees for things like ATM cash withdrawals. Users only get one free ATM withdrawal each month. After that, each withdrawal is $.90, and that's assuming the user has easy access to one of SS's in-network ATMs. Users can, however, get cash-back-with-purchase for free, as well as cash from a bank. Theoretically, the card should debit funds so quickly that users cannot overdraw their funds, but it's unclear whether this would hold true in practice.

For those SS users that opt for direct deposit instead of a debit card, there's the possible cost of opening a checking account: Consumer Reports says only about 64% of financial institutions offer free checking accounts (down from 76% in 2009). Big banks in particular are creating more hurdles, and potentially more fees, for low-balance customers. According to a Social Security spokesman's statement, there are about 4 million current users of Social Security who do not have bank accounts, and it's uncertain how many users will fall into that category by the March 2013 deadline. For those who do have bank accounts with big banks like Chase or Bank of America, there are the usual fees and restrictions: minimum balances, overdraft fees, money transfer fees, bill pay fees, and various other penalties. Credit unions usually offer somewhat reduced versions of these fees, or may eliminate them altogether.
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...PNC has done ~surprisingly~ well in keeping my checking account the no-fee, no-balance minimum, no-ATM debit-based account that I had originally set up with National City, who they bought out.

I ~think~ the same thing applies to its new, non-NationalCity-originated accounts also. They don't even charge me for out-of-network ATM's (although the ATM's actual owner still can -- it's a double-dip, but PNC doesn't collect their 'dip').

Definitely worth checking out, as I haven't found anywhere else near me that offers anything even close to that kind of account.

went into the bank it was free. I also used it to purchase garden supplies like any other debit card. I did not want a checking account because I am in so much debt to the bankers that I am afraid of them. The debit card allows me to take as much as I want out in cash and no one can take it from me.

Sounds like another way for the financial institutions to bleed money out of people who hardly have any. It could be intentional on the part of players in government who are too close to said institutions. There also can be some of the law of unintended consequences.

My SSDI benefit is direct deposited into my credit union account. I pay $1.00 a month for the debit card but the checks are free.

Free ATMs abound. Paying fees is for those who don't pay attention. I have never ever paid an ATM fee.

free travelers checks, and a free debit card.. Our checks are direct deposited..never a fee..

we even get an interest rate boost for our CDs by having direct deposit

just a friendly small community bank....who even gives me cool stuff..just got a beautiful porcelain travel coffee mug for their free coffee..

to find free checking and ATM fees or whatever.

I can use my ATM at my own bank and not pay a fee. I get free checking, which I rarely use now because I do online banking.



This is from a small local bank, where my SS is direct deposited, and I have a credit card through this bank that takes a percentage off my bill each month for using the card at different places.

I also have money in two separate credit unions...one of them associated with my second credit card, and again I get a percentage taken off my bill for using the card.

I think people who are screaming about having direct deposit instead of the paper check aren't taking into consideration that they may have to spend gas or public transportation money to get to the bank to cash those checks, and nowadays it's difficult to cash a check without a bank account. Some of those people might even have to cash checks at those sleazy "Check Cashing" places and pay an outrageous fee for doing it. Also, the money it might cost to use an ATM card might be worth it in terms of security...knowing that the check won't get lost in the mail, or stolen from the mailbox.

Oh, and one more benefit of the ATM cards...if your purse or wallet gets stolen, and all you have in there is ATM cards and no cash, you haven't lost anything. Your money in the bank is still safe and it's not like you lost whatever cash you were carrying around at the time.

Yes, it's a pain to get a new card, but nowhere near the disaster of losing a whole wallet full of money.