The color of money

Soon, those checks won’t be in the mail

 

Washington Post Service

The Treasury Department is facing a March 1 deadline to get millions of people who still receive their benefit payments by mail to convert to electronic delivery.

Affected are those receiving Social Security, Supplemental Security Income, Veterans Affairs, Railroad Retirement Board or Office of Personnel Management benefits and other non-tax federal payments. The government has been gradually phasing out paper checks to save money. It costs 92 cents more to issue a paper check than electronically depositing the benefit money.

Two years ago, 11 million checks a month went out to benefit recipients, according to Walt Henderson, director of the Treasury’s “Go Direct” campaign. The number has since been reduced to 5 million, with the highest monthly check volume in California, New York and Texas.

“We are encouraged,” Henderson said. “I realize it’s human nature to procrastinate when you know you have to do something. I think it’s also fear of the unknown. But it’s just a matter of getting through the first electronic payment.”

You can sign up for direct deposit or the “Direct Express” debit MasterCard by calling 800-333-1795. You can also sign up online by going to www.godirect.org. With the debit card, you can make purchases, pay bills and withdraw cash at ATMs. Starting in 2011, anyone newly applying for federal benefits had to choose to get their money in one of these ways.

The debit cards are issued by Comerica Bank. There are no fees to sign up. There are also no monthly fees or overdraft charges. And you don’t have to go through a credit check to enroll.

When I first wrote about the Direct Express debit card, I was critical of one aspect that I still think needs to be changed. Currently, people using the card get only one free withdrawal per deposit of federal funds. And to get that one free withdrawal, you have to use specific ATMs in networks associated with the Treasury program. There are more than 50,000 such ATMs nationwide. You can find the nearest ATM where you won’t be charged for the first free withdrawal by going to www.usdirectexpress.com. At the bottom of the home page, click the link for “ATM Locator.”

If you exceed the one withdrawal, it will cost 90 cents, and this does not include a surcharge that may be levied by the ATM owner. At the very least, people ought to be allowed three or four free ATM withdrawals a month.

Still, if you manage the debit card right, you can avoid racking up fees. There is no fee for using a bank teller. You can use the card anywhere a debit MasterCard is accepted. Merchant purchases and cash back received during those transactions also come with no fee. If you lose your card, you get one free replacement per year. Lose that card and a replacement will cost $4.

Just like with any debit card, watch how you use it. If you want a paper statement, it will cost you 75 cents a month. And if you want money transferred to a bank account, you’ll be charged $1.50.

If fear of getting your money electronically is keeping you from signing up, consider this: In 2011, 440,000 Social Security and Supplemental Security Income checks were reported lost or stolen. In the same year, $70 million Treasury checks were fraudulently endorsed. You are 125 times more likely to have a problem with a paper check compared with an electronic payment, Henderson said.

“In the unlikely event that a direct-deposit payment goes missing, it is much easier to pinpoint the problem versus a paper check that is lost in the mail system or stolen from a mailbox,” he said.

Regardless of whether you’re afraid or just procrastinating, you don’t have to worry that you won’t get your check if you don’t meet the March 1 deadline. You have to sign up for direct deposit or the debit card before your paper checks stop.

“We don’t have authority to stop people’s payment if they don’t switch by March 1,” Henderson said. “You will still get a paper check but you will be hearing from us in a more personal way.”

About 93 percent of the benefit payments are now being made electronically, and getting the remaining paper check recipients to convert to electronic payments will save the government $1 billion over the next 10 years, according to the Treasury Department.

Treasury will grant waivers from the electronic mandate for certain people. Automatic waivers are granted to people born on or before May 1, 1921. And you can ask for a waiver if you live in a remote area that does not support electronic payments.

Hear Michelle Singletary’s personal finance reports on www.npr.org. Readers may write to her c/o The Washington Post, 1150 15th St., NW, Washington DC 20081.

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