Right now, two things many people are getting in debit card form are unemployment benefits and tax refund anticipation loans. But before taking money on a handy debit card, take a minute to look over the potential fees you’ll run into.
Unemployment Benefits on Debit Cards
CNN recently had an article on Pennsylvanian unemployment benefits fees for debit cards. If you’re getting your PA (or many other states’) unemployment benefits on a debit card, rather than waiting for a check, there are a number of fees you need to be aware of. For example, in PA a balance inquiry costs 40 cents. Having the card denied costs 50 cents. Having the account accessed by telephone costs 35 cents. Using an out-of-network ATM costs $2-3.
This isn’t too different from having a debit card, depending on your bank’s policies, but the problem is that people are thinking of this more as accessible cash than as having another bank account. You should be able to do most normal transactions without fees, but take the time to be aware what you can and can’t do for free. And if that’s more limiting than having the money in your normal bank account is, consider opting for the checks instead.
The advantage of the card is that you don’t have to wait for a check to arrive or go to the bank (or pay a fee at a check-cashing location) to cash it. As long as you’re getting benefits, it automatically recharges.
Are these fees evil? I don’t think so, I see them as part of having what’s essentially a bank account. But if you’re already at a bank that offers better options, you may want to stick with checks.
Tax Refund Anticipation Debit Cards
While on the subject, I wanted to highlight tax refund anticipation debit cards. The only one I’m familiar with is H&R Block’s Emerald Card, but there may be others. A number of tax assistance centers will also offer a loan based on the refund that you’re supposed to get from the IRS. The idea is that you can get your money right away instead of later.
Even if you’re not getting it on a debit card, I think these loans are crap. They’re only a good idea if you’ve found yourself in a desperate situation and are willing to pay the fees to have the money now. If you don’t need the money to pay for necessities, you’re much better off just waiting for your refund and getting the whole thing.
Additionally, H&R Block offers these refund anticipation loans on debit cards. Like the unemployment benefits debit cards, these ones also come with certain fees (plus the fees up front, like you would have on any refund anticipation loan). For example, “the fee is just $1.95 per transaction when using ATMs in the U.S. and $2.50 per transaction when traveling abroad.” Yay? At least getting cash back with your purchase still doesn’t cost anything.
Know the Fees
I’m not a fan of the Emerald card, but I can more easily understand why someone might want to opt for their unemployment benefits in a debit card form. It’s faster, it can be used right away, you don’t need to have a bank account. As with everything, make sure you understand the fees you may be charged and the places you can and can’t use it before you find fees start eating up your money.