The state of South Carolina and Bank of America have teamed up together to administer unemployment benefits to South Carolina residents. Unemployment benefits used to come in the form of a check but are now being issued in the form of a Bank of America prepaid debit card.
Bank of America claims that it’s good deal for everyone from taxpayers to those receiving unemployment benefits. In fact, by utilizing the use of prepaid debit cards, The South Carolina Department of Employment and Workforce expects to save around $5 million annually without printing and mailing checks.
According to a Pew Research Center report from last fall about 1/10 of all South Carolina households did not have a bank account – Source. With this knowledge the State’s Department of Employment figures issuing the prepaid cards are a great way for families that do not have a bank account to avoid paying fees for cashing their benefit checks.
While the State had good intentions in mind they, along with bank partner Bank of America, are getting some bad press over this decision. While Bank of America (BoA) has the largest number of ATMs across the country, many living in rural areas without a BoA ATM or branch, are incurring massive fees when withdrawing money from their prepaid cards.
You see, as a Bank of America customer I can attest to this. If I withdrawal money from a non-Bank of America ATM I will usually have to accept charges from the bank of a $3.00 fee. My statement will then show an extra $2.00 from Bank of America for using an ATM outside of the bank. In total if I withdrawal money I can expect to have an extra $5 taken out of my account in fees. This is what the corporate world likes to call a “convenience” fee.
Residents of South Carolina that do not have a Bank of America branch or ATM in their general area are getting all too familiar with these fees and are in an uproar over the new prepaid system and many are experiencing a $1.50 “convenience” fee with these debit cards.
South Carolina is not the first state to make an accord with Bank of America in regards to prepaid cards paying out unemployment benefits; California and New Jersey have been working with the bank for months. In fact, in May the National Consumer Law Center named Bank of America’s prepaid cards “the best in the nation.” However, “unemployed card holders in those states don’t face the same list of potential fees that exist in South Carolina. One example: California and New Jersey’s contracts allow card users to conduct a limited number of free transactions at other banks’ ATMs” – Source.
When South Carolina learned of the options that are offered to those in other states the state asked Bank of America for changes and in July those unemployed were given unlimited free withdrawals at ATMS and one free withdrawal from any bank teller where the VISA logo is displayed per week.
However, this doesn’t help people that may need to make multiple withdrawals within a week. I read one article that seemed to point blame at Bank of America for this situation but I think both the state of South Carolina and the bank should be scrutinized on an even playing field. The state is the one that put this into effect and knew the terms and conditions with Bank of America that would be placed upon residents.
In August 2010, unemployment officials summoned [Sandra] Gortman for a benefits review during which she says she was strongly encouraged to sign up for a prepaid debit card. Gortman resisted. Fearful that the agency would delay her benefits if she did not submit, she says, Gortman signed the form. A few weeks later the card and a brochure came in the mail. The potential fees were disclosed in the fine print, she says, but she initially missed them – Source.
What are your thoughts on this matter? I feel like so many fingers are being pointed in so many directions on who is to blame for this? How would YOU fix this situation? Leave a comment below!!
As always, folks, be sure to read the fine print of anything you willingly opt into – even your government unemployment benefits!