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Tuesday, March 17, 2009

California using Debit cards to pay unemployment

California is now considering issuing debit cards to pay unemployment claims by following the footsteps of 29 other states. Why you ask? The state of New Mexico has saved $1.5 million annually by switching from checks to debit cards, next the states feel that since so many people don't have checking accounts it would be cheaper for the recipient to have access too their cash through a debit card then to cash the check at a corner check cashing center. Which could charge up to 3% to cash the check, but there is one problem, the banks are charging up to $3 for one transaction and some are even charging a fee to check your balance over the phone; up to $1.50, so it appears in the long run the person who needs the money the most seems to always lose. The banks don't seem to ever lose with transactions fees of $3.00 and overdraft fees in excess of $20.00 or $1.50 fee for calling to check your balance. So as usual the person in need gets screwed while government and the institutions always seem to look out for themselves. If the state governments were really looking out for the consumer they could work out a deal with the institutions by covering the costs for the use of the card, so that the unemployed worker who needs the money the most could receive the whole benefit of there unemployment claim. Another thing the government could do is to allow for direct deposit for those who do have a checking account.

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