Banks Begin Taking Advantage of the Unemployed

by Minority Fortune

As if high interest rates and over-the-limit fees weren’t bad enough, banks had to find a new way to stoop to an all-time low. We think they’ve found it, and it’s in the form of issuing debit cards to those receiving unemployment. Sick.

It has been reported by Alternet that thirty states have reached contractual agreements with leading banking institutions (Wells Fargo, JPMorgan Chase, Citi, Bank of America) to issue unemployment payments. The states save money by not having to ship and print checks. The banks benefit by drawing interest and inventing ludicrous fees to charge.

Banks must be feeling extremely comfortable these days as their reasons to charge fees get more and more ridiculous. Here’s some horrifying examples of the fee structure for these unemployment cards via Alternet:

And, at first glance, many of the terms seem reasonable enough: Free cash withdrawals from tellers at banks that honor VISA or MasterCard (over 90 percent in the United States) and from ATMs owned by the banks with the contracts (plus one or two others in their networks).

However, in practice, the various fees add up. For example, withdrawals are free — but only to a point. In Maryland, Citicorp gets $1.50 a pop after four free ATM withdrawals a month; in Nevada, Wells Fargo gets $1.25 after two free ones; in Texas, Chase gets $1.50 after only one free withdrawal a week and Missouri’s Central Bank, which offers no free ATM withdrawals, rakes in $1.75 each and every time.

If the bank offering the debit card doesn’t have an ATM in a neighborhood or small town, it’s even worse: Card-holders must use out-of-network ATMs, which spell double trouble. A first fee goes to the bank with the contract — Chase charges $2.75 in West Virginia and Wells Fargo gets $1.25 in Nevada. A second fee — from $2 to $4 — goes to the out-of-network bank that owns the ATM, if the recipient doesn’t have an account there.

Penalties for transactions denied due to insufficient funds, whether at ATMs or stores, are another costly affront: $1.50 in West Virginia and Michigan, and $1 in Texas — though the banks, which use electronic systems — needn’t process anything. Only a few plans, as in Kansas, charge nothing.

To avoid penalties, the jobless must find out how much money is on their cards. But here’s another catch: In Nevada, they get one free ATM balance inquiry a month. After that, the price tag is 50 cents a throw. In Michigan, it’s $1 for every one after the first (per week). In Texas, inquiries are free at Chase ATMs, but 50 cents at all others.

If a card is lost, tack on more. A few banks give the first one gratis, but the next cost $5 each (in Kansas and Maryland) or $7.50 (in Michigan). In North Carolina, Comerica gets $5, period — no freebies allowed.

Most banks charge nothing for cash withdrawn inside, from tellers, but some levy fees after the first visit in a week or month: $5 in Texas and $4 in Michigan.

In summary, these banks have mastered fee schemes to charge the unemployed via withdrawal, lost card, balance inquiry, and insufficient fund fees because plain ole interest isn’t good enough anymore. These fees undermine the experience of even having a debt card. However, the banks are aware of this and are taking advantage of it. While unconscionable, they seemingly could care less.

It sounds like a deal that holds beneficial for two parties, the state and banks, none of which are the consumers. The one question we have is, why didn’t we charge these banks with multiple fees and stipulations before Congress handed over the bailout money? Why didn’t we give them a taste of their own medicine?

The best way to show these financial institutions that we won’t stand for their BS is with our money. These major banking institutions aren’t acting in the consumer’s best interest. Therefore, we shouldn’t give them our business. Instead, it is better to opt for a local bank or credit union with a good reputation and fiscal responsibility.

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