People on Social Security usually aren’t amenable to giving away their benefits. This is why there’s word in government that paper Social Security checks should be routed out. The Wall Street Journal indicates that 2013 is the year in which the Treasury Department will stop paper checks and move entirely to direct deposit and prepaid debit cards. The intention is to save taxpayer dollars and make benefits more secure. But according to numerous consumer groups, this will open the door for big banks like Wells Fargo and U.S. Bancorp to aggressively market choice cash advance-style loans to their Social Security customers.
Banks set their sights on fixed income customers
According to the National Consumer Law Center, these new cash advance-like products are drawn from customers’ Social Security benefits as collateral. Bank personal cash loan of this nature are created when customers file a request via phone or online. The bank takes the cash till payday money out of the consumer’s next receipt of benefits. The real trouble begins if a bank-issued paydayloans isn’t really paid at maturity (35 days): full automatic deduction, regardless of overdraft.
Milking boomers for the bank’s boon
As the latest Wall Street reform bill approaches law status, banks fear the effect the loss of automatic overdraft loans may have on their bottom line. It appears like no small coincidence to the National Consumer Law Center that this aggressive push to get Social Security customers into payday loan-like products coincides with the coming of the financial reform law. Social Security benefits have helped banks rake in $ 700 million annually, so clearly they’re gripping over the potential loss.
Want an alternative to banks fingering your Social Security?
The Wall Street Journal recommends the prepaid debit card option for benefit disbursement. Costs are low and also the cards are FDIC insured. They could be used like an ATM card, also as for purchases and bill payments.
Citations
online.wsj.com/article/SB10001424052748704875004575375474092141764.html
en.wikipedia.org/wiki/Social_Security_%28United_States%29
