According to Forbes, the government thinks about how much it will cost to mail out thousands and perhaps millions of checks a year. In order to cut costs, the federal government wants people to move towards internet banking and direct deposits. However, not everyone in our nation has a bank account or a debit card.
In order to save on check printing and posting costs, the government is considering issuing a form of a prepaid debit card to the unbanked.
Social Security and SSI recipients require monthly payments from the government. The government saved $44 million in 2008 by overhauling its payment program and moving towards an automated, check-less system. The government wants to expand this year and extend the program to all of those who do not have a bank account, estimated at nearly 17 million people. Currently, an estimated 54 million Americans receive some form of social security benefits.
Generally, prepaid debit cards come with many associated fees, which our government is surely taking into consideration. There are also fees to withdraw money from an ATM and fees for inactivity. The government has a better system in place than retail prepaid debit cards. Recipients of prepaid debit cards from the government have access to 15,000 fee-free ATMs.
The IRS started a mail campaign to 600,000 people with an annual income of $35,000 or less, asking if they would opt in to this program. Individuals who opt in receive a MyAccountCard Visa Prepaid Debit Card, where tax refunds will deposit. The federal government plans to offer plastic cards with minimal fees as an alternative to a paper check, which is convenient for Social Security recipients and a money saver for the government.
