For these largely hourly workers, paper paychecks and even direct deposit have been replaced by prepaid cards issued by their employers.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.Devonte Yates, 21, who earns $7.25 an hour working a drive-through station at a McDonald’s in Milwaukee, says he spends $40 to $50 a month on fees associated with his JPMorgan Chase payroll card.“It’s pretty bad,” he said. “There’s a fee for literally everything you do.”Certain transactions with the Chase pay card are free, according to a fee schedule.Many employees say they have no choice but to use the cards: some companies no longer offer common payroll options like ordinary checks or direct deposit.
So after taxes we're talking about people making $200 a week and then having to fork over about 5% to the bank for fees. Even if you have a bank account, forcing employees to only be paid through these cards is an outright scam, and all it does is enrich the banks at the employee's expense. Making these cards optional is one thing, but required? That's awful.
Yet another way we rip off the Americans least able to afford it. But let's cut taxes on the rich, i'm sure that will fix the problem, right?
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Virginia is forcing debit cards on taxpayers who are due refunds on their state taxes. I immediately took mine and had the full contents transferred to my checking account. The bank had to print off a form, get me to sign it, then generate a check and have me deposit _that_. How this is supposed to be simpler and cheaper than cutting a check to begin with I cannot understand. I highly suspect, though cannot prove, that some legislators' palms were greased by the companies involved in the production and servicing of the debit cards. I see the same thing in this story.
But it could be worse, you know. The employers could start paying in scrip.
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