People who receive government benefits such as Social Security or Supplemental Security Income (SSI) will soon stop getting checks in the mail – if they haven’t already.
The U.S. Department of the Treasury has set March 2013 as the target date for all federal benefits and non-tax payments to be delivered via electronic payments. That means benefit recipients will need to have a means of receiving the money, whether by direct deposit into a checking account or onto a prepaid card. Prepaid cards may be the answer for an estimated 60 million Americans who do not use bank accounts as their primary means of managing their finances.
Prepaid cards in the spotlight
The federal move away from paper checks and to electronic payments has been in process for the last several years, but in light of the March goal for a complete changeover, the Network Branded Prepaid Card Association offers the following tips for people transitioning from checks to prepaid cards:
- If you already have a prepaid card, you do not need to get another card. You current card can be linked to your federal benefits account.
- Shop around – the U.S. Department of the Treasury offers the DirectExpress card, but you are free to use any prepaid card you prefer.
- Prepare to get your money faster. Your government benefits will be ready and waiting for you on the day of the payment. You won’t need to wait for the mail or wait in line at the bank.
- Find ways to avoid fees. Many prepaid cards carry fees for things like ATM withdrawals, but there are usually ways to get around these fees. Getting cash back at point of sale terminals, using in-network ATMs, and managing your account online are all strategies for getting around fees.
- Make sure your money is protected. Prepaid cards issued by major banks usually offer the same protections that checking accounts do, such as zero liability for fraud and FDIC insurance, but not all prepaid card issuers offer this. Be sure that the card you choose will keep your money safe.