Hammering The Worker: Payroll Debit Cards

John Thomas8
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Hammering The Worker: Payroll Debit Cards

Postby John Thomas8 » Sun Jun 30, 2013 11:31 pm

[/break1]nytimes.com/2013/07/01/business/as-pay-cards-replace-paychecks-bank-fees-hurt-workers.html?hp&_r=0]Chock full of fees (Jessica Silver-Greenberg and Stephanie Clifford, NYT), these cards are hitting the least able to pay pretty hard, everywhere from Wal-Mart to the New York Housing Authority.





A growing number of American workers are confronting a frustrating predicament on payday: to get their wages, they must first pay a fee.





For these largely hourly workers, paper paychecks and even direct deposit have been replaced by prepaid cards issued by their employers. Employees can use these cards, which work like debit cards, at an A.T.M. to withdraw their pay.





But in the overwhelming majority of cases, using the card involves a fee. And those fees can quickly add up: one provider, for example, charges $1.75 to make a withdrawal from most A.T.M.’s, $2.95 for a paper statement and $6 to replace a card. Some users even have to pay $7 inactivity fees for not using their cards.





These fees can take such a big bite out of paychecks that some employees end up making less than the minimum wage once the charges are taken into account, according to interviews with consumer lawyers, employees, and state and federal regulators.

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magdalen77
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Hammering The Worker: Payroll Debit Cards

Postby magdalen77 » Sun Jun 30, 2013 11:40 pm

[/break1]nytimes.com/2013/07/01/business/as-pay-cards-replace-paychecks-bank-fees-hurt-workers.html?hp&_r=0]Chock full of fees (Jessica Silver-Greenberg and Stephanie Clifford, NYT), these cards are hitting the least able to pay pretty hard, everywhere from Wal-Mart to the New York Housing Authority.





A growing number of American workers are confronting a frustrating predicament on payday: to get their wages, they must first pay a fee.





For these largely hourly workers, paper paychecks and even direct deposit have been replaced by prepaid cards issued by their employers. Employees can use these cards, which work like debit cards, at an A.T.M. to withdraw their pay.





But in the overwhelming majority of cases, using the card involves a fee. And those fees can quickly add up: one provider, for example, charges $1.75 to make a withdrawal from most A.T.M.’s, $2.95 for a paper statement and $6 to replace a card. Some users even have to pay $7 inactivity fees for not using their cards.





These fees can take such a big bite out of paychecks that some employees end up making less than the minimum wage once the charges are taken into account, according to interviews with consumer lawyers, employees, and state and federal regulators.

I know there's a case going through the courts up in (I think) Wyoming County in Northeast PA. It's a McDonald's franchisee who is doing it. The ATM card is through Chase Bank and the nearest Chase Bank outlet is about 90 some miles away. It's darn near impossible to get your money out without paying some kind of fee. And like you say the people at McD's are making either minimum wage or slightly over.

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magdalen77
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Hammering The Worker: Payroll Debit Cards

Postby magdalen77 » Sun Jun 30, 2013 11:47 pm

I don't get what the attraction is for the companies that do it. Can't they just do direct deposit like almost everyone else does?

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Whatever4
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Hammering The Worker: Payroll Debit Cards

Postby Whatever4 » Sun Jun 30, 2013 11:49 pm

I don't get what the attraction is for the companies that do it. Can't they just do direct deposit like almost everyone else does?

Low wage employees usually don't have bank accounts. It's a cash economy at the bottom.

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Mikedunford
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Hammering The Worker: Payroll Debit Cards

Postby Mikedunford » Sun Jun 30, 2013 11:58 pm

I don't get what the attraction is for the companies that do it. Can't they just do direct deposit like almost everyone else does?

Low wage employees usually don't have bank accounts. It's a cash economy at the bottom.

^^^^^This. It's pretty common in some places for low wage retail and food service employees to get a paycheck, sign the paycheck back over to the employer, and get cash for it right there. But ATMs are notorious for not dispensing coinage, and for not dispensing amounts under $20. That's a big problem.

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magdalen77
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Hammering The Worker: Payroll Debit Cards

Postby magdalen77 » Mon Jul 01, 2013 12:10 am

I worked at McD's for 10 years. The first three years were as "crew" and then I worked my way up to 1st assistant manager (we had seven managers for a relatively small store). I'm trying to think of how big the crew was, IDK, maybe 50. I always had a bank account and I think most people did. I know the store owner wouldn't cash pay checks, but the bank he used was just down the street from our store and it's a small town. This was before banks got weird about cashing checks, even their own checks, unless you had an account with them. I didn't see a check cashing store until I moved to Philly in the early '90s.

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Hammering The Worker: Payroll Debit Cards

Postby Squeeky Fromm » Mon Jul 01, 2013 1:25 am

The facts of life are that you don't have to own a slum to be a slum lord. I have seen a lot of poor people get screwed, blued, and tatooed by "The System." Often it starts with a few hot check fees at $27 or more a pop. Cost to the bank to process the bounced check, is less than $2. Assume a person bounces five checks because they forget an automatic withdrawal. Overdrawn by say $50, but the banks COULD clear bigger checks first to result in more fees. That is supposed to have been stopped. Who knows.Anyway, minimum of $130 in bank fees. Not unusual at all for the fees to far exceed the amount overdrawn. Assume salary of 30 hrs at minimum wage($7.25) is about $218 gross. Which barely pays the rent. Then, when the account holder gets behind, the State moves in with its criminal fees and court costs. This is big business in some cities and the lines on Hot Check plea day usually stretch outside and around a court building. Add anywhere from $500 to the $130 in fees plus monthly probation fees of maybe $25 and lawyer costs averaging $500. Now you are up to $1,280 if takes six months of payments to pay off the debt and court costs.In the meantime, the bank has put out an alert on the CHEX system and the poor person can not get a bank account until the bank is repaid. If then. Sooo, now it's off to the check cashing store where cashing $218 will run at least $12. To pay the electric bill, the victim has to pay another $1 for a money order, or use a gallon of gas driving to the utility window, or to a place which will accept utility payments. This occurs with every bill which has to be paid. Add a debit card to the mix with it's various fees and soon the modern day slum dweller can't pay the phone bill, so it gets cut off, and a fee charged to get it turned back on. Same with any utilities or cable. A few dollars in fees doesn't sound like much to somebody making in excess of $50,000 a year. But these people are making maybe $12,000ish a year. Some are 4 days on, 2 days off which puts them just below the level where they can get work benefits, and just above poverty level which restricts welfare type payments. And, because of the money problems, a car insurance bill is skipped, and wouldn't you just guess it! They get a traffic ticket for $150 and must get insurance reinstated. Now, they have to handle their life without a car, and pay for taxis or friends to run them everywhere. Not to mention the fact that they have just burned another week in wages fooling with the insurance problem,They begin to miss a day here and there at work.Now, the rabbit spends an inordinate amount of time trying to get the logistics of income and expenses covered. Not to mention the costs. And about that time, a kid gets sick, so it's off to the doctor where there is probably a small co-pay. And a day's missed work. Meanwhile this circus escalates to where they are hocking stuff to pay a few bills. Life has become an exercise in peonage. Something the Constitution says isn't supposed to exist. My BFF Fabia Sheen, Esq. has tried to help a few people who end up like this, and they can't even pay her a decent fee to do anything. I have read some of the files. It is horrible what is being done to these people. However, it's just the facts of life until Congress and state legislatures get off their asses. BUT, if they cut back on city's income, it has to come out of their budget. And, if the poor don't pay the bank fees, then the rich and middle class will have to. Or, start chopping the big banks off at the knees. Gonna happen - NOT.Squeeky FrommGirl Reporter

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Vice President Maru
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Hammering The Worker: Payroll Debit Cards

Postby Vice President Maru » Mon Jul 01, 2013 7:30 am

But if they load your paycheck onto a Visa card, why can't you just use that card for everything you do? For free? I use my Visa debit card for everything from a $4.83 Starbucks to my slightly higher mortgage payment. If I have any paper money in me at any given time it's usually by accident. What am I missing about the debit card?

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esseff44
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Hammering The Worker: Payroll Debit Cards

Postby esseff44 » Mon Jul 01, 2013 7:40 am

But if they load your paycheck onto a Visa card, why can't you just use that card for everything you do? For free? I use my Visa debit card for everything from a $4.83 Starbucks to my slightly higher mortgage payment. If I have any paper money in me at any given time it's usually by accident. What am I missing about the debit card?

I never use a debit card because it costs the merchant too much and they have to raise prices. People who work at these jobs cannot afford to go to Starbucks for a high-priced coffee. They either bring their own or get it from a stand that only takes cash. Debit card fees eat up the value. You are paying for convenience and not for the goods and services.

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Hammering The Worker: Payroll Debit Cards

Postby A Legal Lohengrin » Mon Jul 01, 2013 8:01 am

The facts of life are that you don't have to own a slum to be a slum lord. I have seen a lot of poor people get screwed, blued, and tatooed by "The System." Often it starts with a few hot check fees at $27 or more a pop. Cost to the bank to process the bounced check, is less than $2. Assume a person bounces five checks because they forget an automatic withdrawal. Overdrawn by say $50, but the banks COULD clear bigger checks first to result in more fees. That is supposed to have been stopped. Who knows.

No shit. Also, don't forget, you don't even have to have actually "bounced" a check to get whacked with something like this. I once had a perfectly balanced account, and the bank actually deliberately processed checks out of order so that the largest (written and deposited days previously) was cashed first, but before a deposit (also days previously), causing a string of other smaller checks to "bounce." This was just outright thievery. This thieving scumbag bank repeatedly changed its name afterward, and was repeatedly bought out by other banks. It eventually ended up under the umbrella of Wachovia. The poor phone rep of this company was subjected to what was probably my most prolonged stream of profanity in my life before I canceled every single account I had with them, after they canceled half the "overdraw" fees.It didn't make them much money to do this to me, but they are on my short list of things and people I will get revenge on some day.

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rosy
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Hammering The Worker: Payroll Debit Cards

Postby rosy » Mon Jul 01, 2013 8:18 am

Over here, banks have to offer what is called a "basic" bank account - one that doesn't offer an overdraft or a cheque book, but does offer free cash withdrawals and free debit card transactions (including ATM withdrawals), free direct debits and deposits. Obviously because there is overdraft facility, clients do have to keep a close eye on their spending as bounced direct debits will cost as much as £25 a time. Even people who are undischarged bankrupts can get these basic accounts. The government forced banks to offer these accounts so that the situation described above can't happen, and so that people didn't lose loads of money cashing cheques at what are basically pawnbrokers. There are cash machines (ATMs) which charge, but these are mostly in shops and at motorway service stations, it's almost always easy to find a bank cash machine which won't charge. In early 2010 it was estimated that 1.75million adults in the UK didn't have a bank account, by June 2010 with the advent of basic accounts this was down to 1million and it's still falling. Those people who don't have a bank account at all either have a Post Office account (described below) or are living on the edge of the economy; possibly in the country illegally and so not allowed to work or receive benefits so dealing only in cash, maybe homeless and begging. Benefits like unemployment or sickness/disability benefits, child tax credit, child benefit and old age pensions can only be paid into an account here, either a bank account or a special Post Office card account which can only be used for benefits, and doesn't offer any debit card or cheques or direct debits. With these accounts, a person's benefits go into the account and they can withdraw anything up to the full balance in cash at any Post Office at no charge.

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Sugar Magnolia
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Hammering The Worker: Payroll Debit Cards

Postby Sugar Magnolia » Mon Jul 01, 2013 8:19 am

But if they load your paycheck onto a Visa card, why can't you just use that card for everything you do? For free? I use my Visa debit card for everything from a $4.83 Starbucks to my slightly higher mortgage payment. If I have any paper money in me at any given time it's usually by accident. What am I missing about the debit card?

They are loading the money onto a pre-paid Visa, not a traditional debit or credit card. There is a huge difference with a pre-paid card and they charge fees for almost any transaction you make on them. We looked into pre-paid cards for the kids when they were in college because they were overdrafting their debit cards and we were astounded at the fees charged. To withdraw cash, in addition to the $2.00 charge from the bank (they are ALL "other bank" transactions because the card isn't tied to a bank account) there was a $2.95 charge against the balance on the card just for using it. $5 for a $20 withdrawal was ridiculous. $3.50 "maintenance fee" per month just to carry a balance on the card. $8.00 if the card wasn't used for 30 days. $3.00 to reload the card. The fees vary depending on which provider you choose and some of them charge a fee to simply check the balance on the card. We figured that a basic $250 card would yield around $200 in actual money for the kids but we had options for them. People who are paid on the cards have no options.Those are just the fees I remember, I'm sure there are more. They remind me of those pre-paid phone cards that charged against the balance just for making the call, not even using minutes.

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Postby A Legal Lohengrin » Mon Jul 01, 2013 8:36 am

After a lifetime of dealing with banks, I had thought thievery, petty fuckovers and outright shitty behavior on a day to day basis was just part of life.A bit over a year ago, I switched to a credit union. How many cheap screw jobs have I had since then? How many dollars in made-up fees? How much rudeness from incompetent employees? NONE. Not a single damn penny. They even reversed the only overdraft I had, and it was completely my fault and I didn't even ask them to. My advice is stay away from banks, forever. The misery they add to your life is not worth the few minutes you might save driving to a slightly further away ATM and the tiny inconvenience of a credit union. Just being able to walk in and recognize someone is a premium.

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Whatever4
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Hammering The Worker: Payroll Debit Cards

Postby Whatever4 » Mon Jul 01, 2013 9:39 am

I heartily agree with the credit union advice. My mom has banked with her credit union since it was founded. She has dragged me in multiple times over the years so that the tellers would recognize me. (I'm also on her accounts.) When she had her stroke in March, the CU was awesome. They sent her flowers, helped me figure out her accounts and who was due checks, set me up for online banking, and generally made life easier. Much easier than the other bank she also uses. That bank was pretty pissy even with the POA. They wouldn't take the copy (stamped by the lawyer as a true copy), they wanted the original. We couldn't find Mom's original, I had to borrow the lawyer's copy and walk it over. Meanieheads.

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SueDB
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Hammering The Worker: Payroll Debit Cards

Postby SueDB » Mon Jul 01, 2013 11:56 am

But if they load your paycheck onto a Visa card, why can't you just use that card for everything you do? For free? I use my Visa debit card for everything from a $4.83 Starbucks to my slightly higher mortgage payment. If I have any paper money in me at any given time it's usually by accident. What am I missing about the debit card?

You may not be able to use it anywhere besides the issuing bank. It can be set up to charge money (fee) for each use regardless of where/what use. The bank might charge money for you just pulling the money at once, then you get a "non use fee".The banks have been very skilled in getting money out of people who don't have any (and now less for a payroll system with "trumped up" fees. Use ADP and just cut the damn check already.
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kate520
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Hammering The Worker: Payroll Debit Cards

Postby kate520 » Mon Jul 01, 2013 12:14 pm

Is this class action material? The fees they pay to use their own money amount to an additional tax, non, on only some workers because its not a choice they have accepted in order to get paid?

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Postby Vice President Maru » Mon Jul 01, 2013 12:24 pm

But if they load your paycheck onto a Visa card, why can't you just use that card for everything you do? For free? I use my Visa debit card for everything from a $4.83 Starbucks to my slightly higher mortgage payment. If I have any paper money in me at any given time it's usually by accident. What am I missing about the debit card?

They are loading the money onto a pre-paid Visa, not a traditional debit or credit card. There is a huge difference with a pre-paid card and they charge fees for almost any transaction you make on them. We looked into pre-paid cards for the kids when they were in college because they were overdrafting their debit cards and we were astounded at the fees charged. To withdraw cash, in addition to the $2.00 charge from the bank (they are ALL "other bank" transactions because the card isn't tied to a bank account) there was a $2.95 charge against the balance on the card just for using it. $5 for a $20 withdrawal was ridiculous. $3.50 "maintenance fee" per month just to carry a balance on the card. $8.00 if the card wasn't used for 30 days. $3.00 to reload the card. The fees vary depending on which provider you choose and some of them charge a fee to simply check the balance on the card. We figured that a basic $250 card would yield around $200 in actual money for the kids but we had options for them. People who are paid on the cards have no options.Those are just the fees I remember, I'm sure there are more. They remind me of those pre-paid phone cards that charged against the balance just for making the call, not even using minutes.

Thanks for the info. That clarifies it for me.

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magdalen77
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Postby magdalen77 » Mon Jul 01, 2013 10:12 pm

Is this class action material? The fees they pay to use their own money amount to an additional tax, non, on only some workers because its not a choice they have accepted in order to get paid?

They're trying to get a class action suit against the McD's franchisee in Northeastern PA. I hope they do, I know those franchisees and it couldn't happen to a "nicer" couple.

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Hammering The Worker: Payroll Debit Cards

Postby Sequoia32 » Fri Jul 05, 2013 11:56 am

One in 20 Sacramento households lack bank account

About 44,000 Sacramento households didn't have a bank account in 2011, most instead relying on check cashers and payday lenders, according to the latest data from the FDIC.Those without a bank account often have low income and lack the minimum balance to start one. They are more vulnerable to theft -- and to high-interest charges from those who process their checks.About 75 percent of the region's "unbanked" are under 35. Roughly two-thirds are single mothers. Latinos are almost three times as likely to be unbanked as whites.[snip]About 8.2 percent of households nationwide are unbanked.

[/break1]sacbee.com/2013/07/03/5543800/one-in-20-sacramento-households.html]http://www.sacbee.com/2013/07/03/554380 ... holds.html
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Hammering The Worker: Payroll Debit Cards

Postby GCharlotte » Fri Jul 05, 2013 1:15 pm

No shit. Also, don't forget, you don't even have to have actually "bounced" a check to get whacked with something like this. I once had a perfectly balanced account, and the bank actually deliberately processed checks out of order so that the largest (written and deposited days previously) was cashed first, but before a deposit (also days previously), causing a string of other smaller checks to "bounce." This was just outright thievery. This thieving scumbag bank repeatedly changed its name afterward, and was repeatedly bought out by other banks. It eventually ended up under the umbrella of Wachovia. The poor phone rep of this company was subjected to what was probably my most prolonged stream of profanity in my life before I canceled every single account I had with them, after they canceled half the "overdraw" fees.It didn't make them much money to do this to me, but they are on my short list of things and people I will get revenge on some day.

Yup. And you might be getting a check in the mail. Pretty sure the practice is either illegal now or there's a consent to not do it. Let me explain how the bank was helping you. Let's say you had a check to pay the mortgage and one to pay the car and one to pay the shopping from last night. The thieves came up with this snow job in order to protect you. The idea (they said) was your mortgage payment is the highers so it must be more important. So they did it by reverse order of the check (or EFT) amount. So they would say, sure you bounced some checks but your mortgage got paid. But the problem if you REALLY screwed up is that you're going to hit zero faster by going down instead of up or in the damn order you expected. So you can bounce a lot of small checks at $35 instead of a couple big ones. See how that helps you?

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Sterngard Friegen
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Postby Sterngard Friegen » Fri Jul 05, 2013 1:17 pm

I don't understand your post.

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Postby mimi » Fri Jul 05, 2013 1:30 pm

But if they load your paycheck onto a Visa card, why can't you just use that card for everything you do? For free? I use my Visa debit card for everything from a $4.83 Starbucks to my slightly higher mortgage payment. If I have any paper money in me at any given time it's usually by accident. What am I missing about the debit card?

They are loading the money onto a pre-paid Visa, not a traditional debit or credit card. There is a huge difference with a pre-paid card and they charge fees for almost any transaction you make on them. We looked into pre-paid cards for the kids when they were in college because they were overdrafting their debit cards and we were astounded at the fees charged. To withdraw cash, in addition to the $2.00 charge from the bank (they are ALL "other bank" transactions because the card isn't tied to a bank account) there was a $2.95 charge against the balance on the card just for using it. $5 for a $20 withdrawal was ridiculous. $3.50 "maintenance fee" per month just to carry a balance on the card. $8.00 if the card wasn't used for 30 days. $3.00 to reload the card. The fees vary depending on which provider you choose and some of them charge a fee to simply check the balance on the card. We figured that a basic $250 card would yield around $200 in actual money for the kids but we had options for them. People who are paid on the cards have no options.Those are just the fees I remember, I'm sure there are more. They remind me of those pre-paid phone cards that charged against the balance just for making the call, not even using minutes.

Thanks for the info. That clarifies it for me.

me too. Thank you. It reminds me of all those "checks cashed here" places. And the "payday loan" places.In banking, those with the least pay the most.

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Postby GCharlotte » Fri Jul 05, 2013 1:33 pm

They are loading the money onto a pre-paid Visa, not a traditional debit or credit card. There is a huge difference with a pre-paid card and they charge fees for almost any transaction you make on them. We looked into pre-paid cards for the kids when they were in college because they were overdrafting their debit cards and we were astounded at the fees charged. To withdraw cash, in addition to the $2.00 charge from the bank (they are ALL "other bank" transactions because the card isn't tied to a bank account) there was a $2.95 charge against the balance on the card just for using it. $5 for a $20 withdrawal was ridiculous. $3.50 "maintenance fee" per month just to carry a balance on the card. $8.00 if the card wasn't used for 30 days. $3.00 to reload the card. The fees vary depending on which provider you choose and some of them charge a fee to simply check the balance on the card. We figured that a basic $250 card would yield around $200 in actual money for the kids but we had options for them. People who are paid on the cards have no options.Those are just the fees I remember, I'm sure there are more. They remind me of those pre-paid phone cards that charged against the balance just for making the call, not even using minutes.

OK but here's where I am lost. One advantage of this method is the employee isn't walking around with all their "check" in their wallet. Harder to steal. The money is available a lot quicker. Sure they can do a regular direct deposit into a bank but they are going to have to pay fees for that. Or they can pay a fee for cashing a paper check if they don't have an account.What I haven't seen reported yet (though I haven't read everything) is the fact that Chase allows one free weekly ATM withdraw and one free weekly cash withdraw from any Visa agent. So you could just cash it out all at once if you wanted to with no fees. If you used a non Chase ATM you'd pay the fee that the other bank charge but not to Chase.And that should be an equalizer to a check and a cost equalizer to having a bank account.For me the cash I carry usually comes from cash back when I'm shopping. Surely these people use WalMarts or a supermarket that would give them a periodic withdraw for free.That leaves fees for excessive withdraws and if you lose your card and stuff but I don't see how this would push someone further down the wage ladder if they just do some planning.I'm not advocating for this method. I think people should have a choice. And obviously there's an issue because there is a lawsuit and investigation by an AG.

GCharlotte
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Postby GCharlotte » Fri Jul 05, 2013 1:42 pm

You may not be able to use it anywhere besides the issuing bank. It can be set up to charge money (fee) for each use regardless of where/what use. The bank might charge money for you just pulling the money at once, then you get a "non use fee".The banks have been very skilled in getting money out of people who don't have any (and now less for a payroll system with "trumped up" fees. Use ADP and just cut the damn check already.

There's no fees for using the card as if it was a debit card. It's the ATM withdraws if more than one per week or using a third party ATM. Chase offers ADP as an option so business customers can pick and choose what they want and get support from the bank.But how much does a bank account cost in areas where there are chase branches? I don't know but here I may $5 per month for an account. That isn't much until you look at it over a year and then there's the issue of you should be able to manage the payroll card for purchases and cash withdraws for no cost at all and you get your money faster than a paper check. So no cost and some planning (including don't lose the card) versus $60+ per year. And a lot of these folks are already used to paying WalMart or someone to cash their check and that could be $12 to $16 per month. UPDATE: Chase has an account that is free as long as there is $500 or more in direct deposits. So direct deposit with ATM card and checkbooks gives the most flexibility but it also is a lot easier to overdraft and that kind of thing.

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rosy
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Hammering The Worker: Payroll Debit Cards

Postby rosy » Fri Jul 05, 2013 1:43 pm

Do you get charged in the states for making deposits or cash withdrawals or cheques etc? Do all banks offer the same kind of fee arrangement?


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