Tips for Consumers Using Unemployment Cards
If you are obtaining your unemployment insurance benefits through a state issued prepaid debit card, here are some tips you can follow to keep fees low or to avoid them altogether:
1. Can you withdraw your unemployment insurance benefits for free? If not, what might be the least costly way to withdraw money at ATMs, Bank Tellers, and Point of Sale (POS) transactions:
It is important to know you may be charged fees if you withdraw money from an ATM, at a bank, or when making a purchase at a store. However, you might avoid fees if you withdraw money at an in-network ATM or with a teller at a participating bank location. Beware if you use an out-of-network ATM, you’ll have to pay the out-of-network ATM fee and the fee issued by the ATM owner.
- Store Transactions
To keep fees low when using the card to make purchases at a store, you should choose “credit” over “debit.” Usually, the fee for a PIN based transaction is higher than for signature based transactions. However, it may cost less to ask for cash back during a PIN based or “debit” transaction at a store than incur a fee to withdraw cash at an out of network ATM.
2. How can you keep track of how much money is in your account, without having to pay a fee?
Usually you will be able to look up your account’s balance by checking it at the ATM, online or by phone, or getting a text message or email alert. There is likely a fee if you do a “balance inquiry” at an ATM, or check your balance at the ATM. You may be able to do a “balance inquiry” by phone or online for free, as well as sign up for free text messages or email alerts about your account’s balance. Note that you may have to pay your cell phone carrier a fee to receive each text message alert.
It’s unlikely you’ll obtain a written statement of the month’s transactions in the mail for free. However, you may be able to check your account’s activity online at no cost.
3. Other fees to watch out for:
- Watch out for inactivity, or dormancy, fees
Many of the cards are valid for two or three years. Pay attention to inactivity fees or dormancy fees, which can begin when there is no activity on the card, typically 90 days to 180 days.
- Overdraft fees
Unemployment insurance benefit cards are like most prepaid cards, there is still the chance you might overdraft. Overdraft happens when a transaction is accepted even when there aren’t enough funds in the account. If you overdraft, you are likely to be on the hook for the amount you went in the red as well as any penalty fees.
- Fees for too many withdrawals during a particular period of time
You may be limited to a fixed number of withdrawals or transactions during a period of time such as a 24-hour period; otherwise, you will be charged a fee.
- Fees to replace a card.
If your card is lost or stolen, you will likely be required to pay for a new one.
- Customer service
It may cost to speak with a representative or use the automated voice response customer service lines.
- Check issuance fee
You will likely be charged a fee to obtain a check with the remaining balance when you close the account.
4. Finally, there may be better ways to obtain your unemployment insurance benefits:
- Can you sign up for direct deposit to an existing checking or savings account? Some states allow you direct deposit into existing checking or savings accounts instead of issuing a prepaid card. This would likely be a better option to avoid confusion and fees associated with a prepaid card.
- Can you continue to obtain a paper check?
Some states may still allow you to obtain your unemployment insurance benefits by check.
Prepared by Michelle Jun, Staff Attorney
March 18, 2009