Banks Squeezing Money from Unemployed

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Sunday, December 20, 2009

Banks are making profits off those collecting unemployment benefits. Here’s how: instead of printing unemployment checks, states are increasingly contracting with big banks (Citibank, Wells Fargo, JPMorgan Chase, and Bank of America) to issue jobless benefits using Visa or MasterCard debit cards. This way, states struggling to balance their budgets cut their bureaucratic costs. North Carolina reportedly saved $10 million by turning their unemployment benefits distribution over to banks. Nevada saved $800,000, Maryland $400,000 and West Virginia $340,000.

Meanwhile, banks earn money off fees associated with the special debit cards, and they collect interest from unemployment funds until they’re released to individuals. In Maryland, Citicorp gets $1.50 per withdrawal if an individual makes more than four withdrawals in a month. In Nevada, Wells Fargo collects $1.25 after two free ones; in Texas, Chase makes $1.50 after only one free withdrawal a week.

-Noel Brinkerhoff

Just When You Thought the Big Banks Had Maxed Out Their Chutzpah Account, Think Again. (Consortium News)

Comments

Brad 15 years ago

Sounds like they are squeezing money from the states not the unemployed. Also sounds like the states save by not handling checks or have them stolen.

jt1 15 years ago

remember, they only replace paper checks. You can still have the funds direct deposited to your own bank account. This makes it easier for those without regular bank accounts. They can avoid check cashing stores and the high fees. Plus they have access via Visa usage, just like if it was deposited to their own bank account. It saves a ton for the states and the client can withdraw for free, just within limits. So it is a good thing, doesn't squeeze money, it can save them money. Of course, if the client takes $20 out each day, then fees will occur, but that is their choice.

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Banks Squeezing Money from Unemployed

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