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. Doing so will ideally make benefit distribution more secure and conserve the taxpayers’ money. Unfortunately, big banks like Wells Fargo could not leave well enough alone; consumer groups fear they will market their own high-cost cash advance loans to Social Security customers at an even more frenetic pace.
Banks set their sights on fixed income customers
Collateral for the cash loan loans comes straight from the recurring deposits of Social Security benefits, says the National Consumer Law Center. These personal cash loan can be requested from the bank via telephone or online. When the next benefits check comes via direct deposit, the bank takes its cut for the cash till payday service. Where it gets really scary is when a paydayloans from the bank isn’t paid in 35 days: the bank takes out every little thing owed, whether it causes overdraft and an explosion of fees or not.
Generating funds from disadvantaged customers
As the latest Wall Street reform bill approaches law status, banks fear the effect the loss of automatic overdraft loans can have on their bottom line. The National Consumer Law Center believes this may be a big reason why these larger banks are aggressively pushing payday loan 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 recommends the prepaid debit card option for benefit disbursement. They don’t cost much and they’re fully FDIC insured. They could be used like an ATM card, also as for purchases and bill payments.
Additional info at these websites
online.wsj.com/article/SB10001424052748704875004575375474092141764.html
en.wikipedia.org/wiki/Social_Security_%28United_States%29
