Texas Unemployment Benefits - Wasteful Govt. Spending vs. Simple Budgeting (Howe: insurance, credit)

[txdeployer]

Hello,


I just wanted to make my fellow tax payers aware of a gross waste of our social contribution with regard to Texas Unemployment Benefits.

I am a new US Army Veteran and recently filed for Unemployment Benefits. While sitting in the Texas Work Force Unemployment Benefits Orientation, I learned that there are two ways for the beneficiary to receive their compensation.

1) Direct Deposit into Checking or Savings

- This choice creates no additional charges.

2) Re-fillable Debit Card

-The re-fillable Debit Card can be used in ATMs (for a $3-$5 fee per swipe), or at a bank teller (at no extra cost). The TWC rep encouraged the Debit Card users to take the whole ammount from the ATM all at once, so they would only incur one fee per cycle or to simply take the card to any bank teller for free.

MY ISSUE WITH THIS: ATM fees!!! Why are banks even allowed to proffit off of this tax payer funded benefit? Additionally, the beneficiary isn't getting all of the money owed to them because that $3-$5 per swipe is going to the bank. Now, how many Americans are receiving their Unemployment Benefits via the Debit Card? I'm not sure if every state offers the Debit Card payment option, but if they do, the waste would be astronomical. In TX, over 120,000 are receiving benefits. If only 1/4 are using the Debit Card option, then tax dollars are paying (on the low end) between $1.08 and $1.8 million within 6 months. Well, approximately 8.5 million Americans currently receive benefits. Imagine that only 1/4 are using the Debit Card option. So, 2,125,000 Americans swiping their Debit Cards twice per month for 6 months costs between $76.5 and $127.5 million in JUST 6 months. That is a lot of wasted money and banks are getting every penny of it! Are you pissed off yet?? Well there's more.... Now, how much does it cost to produce these cards? Well, after some research, I found a typical price of $780 + $326(s/h) for only 10,000 cards. I'll let you do the math.

MY COMPROMISE: I understand that not all Americans have the ability to acquire a bank account for any number of reasons. For this reason, I would find the production costs as an acceptable expense. HOWEVER, the cards need to simply be exempt from ATM fees (which won't happen). THEREFORE these cards should no longer be permitted to function as ATM cards! These card holders just need to GO INTO A BANK TO GET THEIR MONEY! This small change will save tax payers a ton of money!

If you agree with me on this, I encourage you to pass a similar message onto your senator(s). I am contacting mine. Remember, there's power in numbers! Oh, and did you know that Veteran Benefits are disappearing more and more each day? They say its due to the rising costs of Unemployment.

Please reply with your opinion and thank you for reading.

[Ariadne22]

CA has been paying benefits via BofA debit card for a while. Recipient can set up an automatic transfer off the card into their own bank account at no fee.

Whole thread on the subject, here:

//www.city-data.com/forum/unemp...ebit-card.html

If TX arrangement doesn't allow recipient to get their money without a fee, TX recipients need to file a complaint with their legislators.

[Dopo]

Originally Posted by txdeployer

The re-fillable Debit Card can be used in ATMs (for a $3-$5 fee per swipe), or at a bank teller (at no extra cost). The TWC rep encouraged the Debit Card users to take the whole ammount from the ATM all at once, so they would only incur one fee per cycle or to simply take the card to any bank teller for free.

There's a group of people that call themselves "The small government crowd"
They believe that we should get government out of everything and just let big business decide whether or not to do something, completely based on whether or not something is profitable.

Well, banks think is profitable to charge for each swipe and they are doing it.
All we can do is call "Big government" to pass a law that will force them to stop doing it.

[Aquitaine]

I would bet dollars to doughnuts that the program went like this:

Gov't: We need to be able to get benefits to people as quickly and cheaply as possible.
Banks: Well, direct deposit is really easy to set up and costs us nothing. How about that?
Gov't: That's great, but what about people who don't have bank accounts?
Banks: We're banks. We can't really do much for people who don't have bank accounts.
Gov't: Not good enough!
Banks: Okay, okay, how about refillable ATM cards? We would have to charge money since you're asking us to set up a whole new line of ATM cards not linked to bank accounts (meaning they are not our customers and are unlikely to become our customers) as well as handling security and replacement for these cards when they are (inevitably) lost or stolen. $3-$5 a pop.
Gov't: Sounds great!

So before I would jump down a bank's throat for trying to "profit" off of something like this, I guess I would say that your frustration is not being directed to the right place. If you think that the US government should provide a non-bank way to get this money, then perhaps the government should run its own cash/ATM system just for this. Of course that would cost a fortune, but it wouldn't ding the recipient of the funds for $3 to $5.

I have to wonder what the big deal is about getting a bank account. You don't see free checking like you used to, but all you need to be eligible for free checking at most big banks (to say nothing of credit unions) is direct deposit. So it's tough for me to feel outrage about this.

[txdeployer]

I only want these cards not to be ATM . At this stage people can swipe in an ATM (for $3-5) and bring the card into the bank (for free). It's a simple fix. It's cost effective to switch all cards to "check cards" & begin issuing "check cards".

[OpenD]

It appears you are confused about several fundamental things, and I don't think the change you advocate would save any tax money whatsoever.

1. Although Unemployment Benefits are administered by government agencies, primary benefits are insurance disbursement, not a tax benefit. The premiums are paid by the Employer and by the Employee. This is why the benefits you are eligible to receive are determined by the insurance premiums paid in to your account in the past.

2. Disbursing payments electronically to a checking account or prepaid debit card reduces administrative costs considerably over the previous method of mailing checks, and has obvious convenience and security benefits as well.

3. Not everyone can get a bank account, for a variety of reasons, so electronic disbursement cannot require a checking account. This is why the prepaid debit card was added as an option.

4. In rural areas, there may be no banks nearby, and the cost to drive to one, if one has a car, can easily exceed the $3-5 service charge mentioned. But cash machines (ATMs) are usually as close as the nearest grocery store or supermarket, so the option to get cash from an ATM is a huge convenience for many.

5. The ATM fee for withdrawing cash, if any, is incurred by the user of the card. And the fee for the convenience is reasonable, because cash machines are expensive to own and operate and to keep stocked with cash by armored truck delivery.

6. The prepaid debit card can also be used to make purchases, and by agreement, cash can also be obtained from the merchant (cashback) at no additional charge to the customer.

Nobody HAS to pay the $3-5 convenience fee for getting cash from a cash machine if they don't want to, because there are other no-cost options available.

And to your other point, there's no connection between veterans' benefits and unemployment benefits.

Sorry, it looks like you just misunderstood how things work.