Banks Squeezing Money from Unemployed
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
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