The U.S. government, in a bid to save money and provide better service to the estimated 4 million Americans receiving Social Security benefits that don’t have a bank account, is planning on issuing them a prepaid debit card, in place of the current practice of sending out paper checks.

This new debit card is touted to be identical in function to existing bank debit cards; usable at almost all ATMs and stores, requires a PIN number to use for security, and is connected to an account that the government can automatically deposit Social Security and SSI benefits into.

IT’S A BANK ACCOUNT!

The government is going to set up ‘accounts’ for all those that don’t already have bank accounts in this country, tied to a debit card. They then plan to deposit the monthly SSI benefits into these ‘accounts’ to make them available for use.

If it walks like a duck, and quacks like a duck, and floats like a duck, obviously it’s a witch, but that’s just me.

The Good

This will allow users to not have to worry about SSI checks being stolen, or having to have a separate bank account to deposit said checks. It will be a savings for the government too, as the cost per transaction for the debit cards is around $.04 vs. around $.40 for check-based government systems.

It will prevent check forgery and promote a better security via a PIN based system.

And, of Course, the Bad

Where to start? Fees, fees, and more fees.

"Cardholders will get one free ATM cash withdrawal per deposit per month, but Comerica will charge 90 cents for each additional withdrawal. Like other debit-card holders, users may also face surcharges at many ATMs. Other fees include $3 for international ATM withdrawals, 3% on international currency exchanges, 50 cents for each online bill payment and 75 cents per month for paper statements."

There will be fees to withdraw cash, fees to merchants to process these payments, not to mention having to have the machinery available to process them. And the recipients don’t even get interest on their money sitting in the government’s ‘account’. The interest/float belongs to the government.

My take? Just bite the bullet, join the 20th century, and go get a bank account. It’s no worse than the system the government is going to be putting in place, and you get a few benefits (like accruing interest, and free ATM usage at your bank’s outlets, free bill pay, etc.).

What do you think of the proposed Social Security Debit Card?? Leave us a comment.