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Employees Increasingly Paid by Prepaid Cards


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#1 detectiveconan16

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Posted 02 July 2013 - 09:39 PM

I know some of you CAGers have experienced this already, especially when you work at Gamestop or McDonald's, or Taco Bell. The NY Times reports that this is an increasing trend among employers because it's "supposedly" cheaper for them, even though they are cards that come with fees.  Some employers may let you opt out for direct deposit as the only other option, but it seems the scheme gives them a bonus for signing up each additional employee.

 

I personally think it's an awful practice, and have seen this with some fellow students with their financial aid money.  If you don't cash out once a month, it's going to cost about $40 out of your paycheck, according to the article.  One subject in the story had to keep all her months wages in cash, just like our parents did when they struggled to earn a living.

 

If we barely trusted banks after the financial crash, why would we continue to let them play with our money for the sake of convenience?


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#2 Finger_Shocker

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Posted 02 July 2013 - 09:46 PM

What do you propose...?

 

Money is nothing more then the value we associate with it, when its basically paper with ink or some cheap metal stamped with a face on it ...

 

But digital currency will soon be the NWO, in the name of safety...

 

Banks love digital currency, no LABOR cost



#3 Kerig

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Posted 02 July 2013 - 10:51 PM

I suppose it's better than paying you in Gamestop gift cards :)

 

My place of employment recently stopped giving physical pay check stubs if you have direct deposit.  I'm one of the very few there who still gets their live paper check so I had to watch as almost everyone else was up in flames about having to log onto a new system that barely works just to see their paycheck info (pay, taxes & medical deductions, etc).


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#4 IronChariot

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Posted 02 July 2013 - 11:04 PM

I know some of you CAGers have experienced this already, especially when you work at Gamestop or McDonald's, or Taco Bell. The NY Times reports that this is an increasing trend among employers because it's "supposedly" cheaper for them, even though they are cards that come with fees.  Some employers may let you opt out for direct deposit as the only other option, but it seems the scheme gives them a bonus for signing up each additional employee.

 

I personally think it's an awful practice, and have seen this with some fellow students with their financial aid money.  If you don't cash out once a month, it's going to cost about $40 out of your paycheck, according to the article.  One subject in the story had to keep all her months wages in cash, just like our parents did when they struggled to earn a living.

 

If we barely trusted banks after the financial crash, why would we continue to let them play with our money for the sake of convenience?

Most Americans didn't do much at all after the financial crash. They laughed at those of us who protested and took our money elsewhere and seem to hate on anything that protects workers' rights so I'm not too optimistic that they will do anything about this either.



#5 UncleBob

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Posted 03 July 2013 - 12:20 AM

I know some of you CAGers


CheapAssGamerers?

Seriously, though... If the card is set up so that the employee can withdraw all the cash at once with no fees, I see no issue with it - it'd be just like a paycheck. Go to the bank, hand them the card, they give you the cash and you do with you want with it.

If the card charges any fees for that first withdrawl or inactivity fees if you don't withdraw the money before 180 days, then I don't like it.
"The ultimate weakness of violence is that it is a descending spiral, begetting the very thing it seeks to destroy, instead of diminishing evil, it multiplies it."

#6 willardhaven

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Posted 03 July 2013 - 01:28 AM

CheapAssGamerers?

Seriously, though... If the card is set up so that the employee can withdraw all the cash at once with no fees, I see no issue with it - it'd be just like a paycheck. Go to the bank, hand them the card, they give you the cash and you do with you want with it.

If the card charges any fees for that first withdrawl or inactivity fees if you don't withdraw the money before 180 days, then I don't like it.

http://abcnews.go.co...81#.UdN8zti0R4o

 

This is a deal between the banks and the companies that implement them... anything to squeeze more money out of poor people.


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#7 UncleBob

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Posted 03 July 2013 - 05:22 AM

has a $1.50 fee for ATM withdrawals, a $10 inactivity fee after 90 days, and a 75 cent online payment fee per transaction and other fees.


I guess I need to know what those "other fees" are.

You can't withdraw a paper payroll check from the ATM, so no issue with that fee.
I'd prefer the inactivity fee to kick in after 180 days - but friends tell me that most payroll checks are only good for 90 days anyway.
Can't make online payments with a paper payroll check, so no issue there.

Can I take this card, go into any reputible bank, and just like a paper check, walk out with 100% of my money (short of whatever fees that individual bank may charge, which they also do with paper checks?)

This article doesn't make that clear.
"The ultimate weakness of violence is that it is a descending spiral, begetting the very thing it seeks to destroy, instead of diminishing evil, it multiplies it."

#8 IRHari

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Posted 03 July 2013 - 10:04 AM

CheapAssGamerers?

Seriously, though... If the card is set up so that the employee can withdraw all the cash at once with no fees, I see no issue with it - it'd be just like a paycheck. Go to the bank, hand them the card, they give you the cash and you do with you want with it.

If the card charges any fees for that first withdrawl or inactivity fees if you don't withdraw the money before 180 days, then I don't like it.


Just like ATM machines and MSDS sheets :)
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#9 detectiveconan16

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Posted 03 July 2013 - 10:24 AM

Sweet, the New York Attorney General just announced he's investigating Walmart and Costco over this practice. http://www.bloomberg...roll-cards.html But I guess I should really hate Schneiderman for being an activist AG.


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#10 willardhaven

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Posted 03 July 2013 - 02:00 PM

CheapAssGamerers?

Seriously, though... If the card is set up so that the employee can withdraw all the cash at once with no fees, I see no issue with it - it'd be just like a paycheck. Go to the bank, hand them the card, they give you the cash and you do with you want with it.

If the card charges any fees for that first withdrawl or inactivity fees if you don't withdraw the money before 180 days, then I don't like it.

 

 

I guess I need to know what those "other fees" are.

You can't withdraw a paper payroll check from the ATM, so no issue with that fee.
I'd prefer the inactivity fee to kick in after 180 days - but friends tell me that most payroll checks are only good for 90 days anyway.
Can't make online payments with a paper payroll check, so no issue there.

Can I take this card, go into any reputible bank, and just like a paper check, walk out with 100% of my money (short of whatever fees that individual bank may charge, which they also do with paper checks?)

This article doesn't make that clear.

 

I have no problem with you changing your mind, but you contradicted yourself within 5 hours of your previous post.

 

I believe you can withdraw the whole check from a bank minus a fee.

 

Unlike a check, you cannot deposit your bank card into an account. You must first withdraw the cash and pay the fee, afterwich you may deposit your cash. Do you see the problem there?


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#11 UncleBob

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Posted 04 July 2013 - 12:52 AM

I have no problem with you changing your mind, but you contradicted yourself within 5 hours of your previous post.
 
I believe you can withdraw the whole check from a bank minus a fee.
 
Unlike a check, you cannot deposit your bank card into an account. You must first withdraw the cash and pay the fee, afterwich you may deposit your cash. Do you see the problem there?


The only thing I contradicted was the 90/180 day thing - and that was because I wasn't aware most payroll checks are only good for 90 days.

I can take a payroll card to a teller at my bank and have them withdraw the entire balance - with no fees from the bank, because I have an account there. I can then deposit that money into my account.

This article does not describe any fees associated with withdrawing the cash outside of an ATM withdraw. If there's a fee on the card itself for going to the teller and getting the money, then I object to it. That simple.
"The ultimate weakness of violence is that it is a descending spiral, begetting the very thing it seeks to destroy, instead of diminishing evil, it multiplies it."

#12 joeboosauce

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Posted 10 July 2013 - 04:30 PM

Most Americans didn't do much at all after the financial crash. They laughed at those of us who protested and took our money elsewhere and seem to hate on anything that protects workers' rights so I'm not too optimistic that they will do anything about this either.

This^. Lazy and intellectually lazy is what we are.


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#13 willardhaven

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Posted 11 July 2013 - 03:28 PM

The only thing I contradicted was the 90/180 day thing - and that was because I wasn't aware most payroll checks are only good for 90 days.

I can take a payroll card to a teller at my bank and have them withdraw the entire balance - with no fees from the bank, because I have an account there. I can then deposit that money into my account.

This article does not describe any fees associated with withdrawing the cash outside of an ATM withdraw. If there's a fee on the card itself for going to the teller and getting the money, then I object to it. That simple.

 

The article was unclear. I looked up some examples and it seems your bank has to be a "member" of the credit card brand associated with your pay card. If not you are probably on the hook for some kind of fee.

 

You are incorrect about paychecks. You must be issued a new check by your employer after the check "expires" (which it doesn't). They cannot charge you a fee for not depositing the item in a certain time frame.

 

On a side note, I'd love to know the eventual environmental cost to the public for disposing of these cards. I know when I worked in a bank we had plastic recycled with paper shreds via a third party vendor. I doubt most workers will be able to recycle theirs.


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#14 UncleBob

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Posted 11 July 2013 - 11:04 PM

The article was unclear. I looked up some examples and it seems your bank has to be a "member" of the credit card brand associated with your pay card. If not you are probably on the hook for some kind of fee.

 

You are incorrect about paychecks. You must be issued a new check by your employer after the check "expires" (which it doesn't). They cannot charge you a fee for not depositing the item in a certain time frame.

 

On a side note, I'd love to know the eventual environmental cost to the public for disposing of these cards. I know when I worked in a bank we had plastic recycled with paper shreds via a third party vendor. I doubt most workers will be able to recycle theirs.

I can't imagine the impact of creating, distributing, and disposing the cards after a period of time would be more than the impact of creating, distributing and disposing of paper checks every week/every two weeks.

 

Perhaps "expires" isn't the right word, but I was always under the understanding that "Void after 90 days" (or some such text) on the check means just that - the paper is no longer valid.  I was unaware that an employer has to reissue a check... does this mean that if I get PO'd at my boss, quit, then get a check for my final pay period.... and I can make them reissue it every other week, at their cost?  And they'd be on the hook for the stop-payment fee on the old checks?  Seems like an unfair hassle for the employer.

 

Anywhoo, my knowledge of these paycards is limited, as I do get direct deposit every pay period - my initial stance still stands - if the employee can reasonably empty the balance of the card - at once and without any fees charged by the card at any major reputable financial institution, then I don't have a problem with them.  If an employee cannot do this, then the card is not a proper way to pay the employee.  Not a fan of the inactivity fee - I'd replace it with a system where if the card is inactive for a period of time, then the card issuerer will cut a check to the employee via the address they have on file and terminate the card.

 

As for all the other fees (online bill pay, ATM fees, swipe fees, etc.)... Don't use the payroll card like a debit card and you won't have that issue.


"The ultimate weakness of violence is that it is a descending spiral, begetting the very thing it seeks to destroy, instead of diminishing evil, it multiplies it."

#15 willardhaven

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Posted 12 July 2013 - 01:33 AM

I have never heard of someone abusing their employer's obligation to pay them before. I would imagine after a few attempts to pay you they would try to wire the money to an account that you provide. I think the employer can just turn it over to the state. It's funny how quick you are to mention an unfair burden on employers while forcing employees to carry a piece of plastic to receive their money isn't a problem.

 

I read into it a little more and it seems these are reloadable cards, not disposable ones. That's how the employers save money on the deal.

 

They're very sketchy as it's essentially an account you have to keep track of. If you "overdraw" your pay card you receive penalties as well.

 

I would opt for direct deposit but 1/4 households do not have a bank account.


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#16 UncleBob

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Posted 12 July 2013 - 01:53 AM

They're very sketchy as it's essentially an account you have to keep track of. If you "overdraw" your pay card you receive penalties as well.


Again, if you can just dump the card each week/biweekly, then it's just like a paycheck, right? If *you* choose to use it like a debt card, isn't that your choice?
"The ultimate weakness of violence is that it is a descending spiral, begetting the very thing it seeks to destroy, instead of diminishing evil, it multiplies it."

#17 willardhaven

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Posted 12 July 2013 - 02:29 AM

From further reading it seems you keep one card. Hence the cost savings. It would be more expensive to print up debit cards each week.

 

This is essentially a bank account employees are forced to have. You can empty it into your real bank, but it doesn't go away.

 

Here's an article I read on it:

 

http://www.cbsnews.c...-payroll-cards/


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#18 UncleBob

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Posted 12 July 2013 - 03:57 AM

Curious - do you feel that an employee should be able to demand their pay in cash, in stead of a check or pre-paid debit card?
"The ultimate weakness of violence is that it is a descending spiral, begetting the very thing it seeks to destroy, instead of diminishing evil, it multiplies it."

#19 willardhaven

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Posted 12 July 2013 - 04:04 AM

They can. They won't get it though.


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#20 UncleBob

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Posted 12 July 2013 - 04:07 AM

Do you think the law should require that an employer pay the employee in cash at their request? I guess that's what I'm getting at. Hell, an employee can demand that the employer pay them in moon dust from Mars. ;)
"The ultimate weakness of violence is that it is a descending spiral, begetting the very thing it seeks to destroy, instead of diminishing evil, it multiplies it."

#21 willardhaven

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Posted 12 July 2013 - 04:14 AM

Of course not. Currently it is not illegal to use these debit cards... I suspect that may change though as it should.


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#22 UncleBob

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Posted 12 July 2013 - 04:48 AM

Aside from the legality of it, why are you okay with employer paying an employee with a paper check? If an employee is one of the unbanked, then the employee is unlikely to be able to be able to get the check cashed without a fee.
"The ultimate weakness of violence is that it is a descending spiral, begetting the very thing it seeks to destroy, instead of diminishing evil, it multiplies it."

#23 willardhaven

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Posted 12 July 2013 - 01:35 PM

Checks do not force you into the banking system. These cards do.


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#24 UncleBob

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Posted 12 July 2013 - 04:25 PM

So... you're less concerned with employees having to pay fees to get their money and more concerned with employees being forced into 'the system'?

What are your thoughts on receiving benefits from the government on a pre-paid debit card?
"The ultimate weakness of violence is that it is a descending spiral, begetting the very thing it seeks to destroy, instead of diminishing evil, it multiplies it."

#25 willardhaven

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Posted 12 July 2013 - 04:28 PM

I am fine with the cards if they are not loaded with fees and also contain a weekly statement w/ an account balance or a way to check your balance easily. They also should be free to replace if you lose them.

 

Do you see how this is different from a normal pay check or cash? It is more complicated and creates an unnecessary hassle for the employee.

 

I don't know where you are going with benefit cards. Are those loaded with penalty fees too?

 

Your employer does not get to make you open a bank account. Even if they call it a pay card.

 

If these were optional then there really is no problem there either (unless employees receive improper disclosure). I am basing my opinion on what I read in those several articles so I'm sure these systems vary.


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#26 UncleBob

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Posted 12 July 2013 - 04:39 PM

I just don't see how it's more complicated for an employee. Go into the same types of places you'd go to cash your check, unload the card and done. That simple.

Yes, government benefits loaded onto pre-paid cards enjoy the same types of fees that payroll checks on pre-paid cards do.

http://about.bloombe...rd-tax-refunds/

Data from the federal MyAccountCard pilot program give some idea of the average variable fees incurred by users who chose to participate. The Urban Institute analysis of that program reports that individuals paid an average of $5.11 per month in variable fees during the time when the card was in use. Individuals who used the debit card for more months incurred fewer monthly fees; for instance, among those taxpayers who used their card for at least six months (through July 2011), monthly charges were $3.16 on average and thus represent an average of $19 paid in fees. Most of these fees resulted from ATM usage fees.


The benefits cards would also force people into 'the system', just the same as a payroll card.
"The ultimate weakness of violence is that it is a descending spiral, begetting the very thing it seeks to destroy, instead of diminishing evil, it multiplies it."

#27 willardhaven

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Posted 12 July 2013 - 05:04 PM

These are essentially crappy bank accounts that employees are forced to have to be paid by their employer. If they are an option that's fine (just like direct deposit). I would have a problem with an employer requiring direct deposit as well (even though I prefer it).

 

As far as the MyAccountCard government program you linked, paper check is still an option isn't it? If it's required and features the same batch of fees, then it's just as bad.


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#28 UncleBob

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Posted 12 July 2013 - 06:08 PM

If you just pull all the cash out each pay period, then it's essentially nothing.

In the article I linked to, it discussed several types of government programs where money is distributed via pre-paid debit cards. Including some states which required tax refunds to be paid out via pre-paid cards or direct deposit.
"The ultimate weakness of violence is that it is a descending spiral, begetting the very thing it seeks to destroy, instead of diminishing evil, it multiplies it."

#29 willardhaven

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Posted 12 July 2013 - 06:29 PM

There are fees to find out how much is on the card. There are fees to move the money into a checking account. There are fees for "statement reprints" (is that just your payroll stub or is that still free?). There are fees for not using your card. A fee for closing your account (is that if you lose your card?). Some employers are not disclosing that these cards are optional as well.

 

Payroll cards are not offered by banks to reduce payroll costs out of the kindness of their hearts. They are predatory instruments to make up for "lost revenue" after Dodd-Frank limited how much the banks can squeeze customers. People are largely uneducated on navigating bank and credit card company policies, so the cards are the perfect way to accomplish the banks' hunger for profit.

 

I use direct deposit when I can, I also have a moderate degree of financial education. I recognize that not everyone does so what is "essentially nothing" to me might be a big problem for others.

 

Also, there is no way in hell I would accept a charge of $104.00 a year (52 weeks @ $2.00 per withdrawal) to access my pay.

 

We can move on to debate the merits of for-profit banking, but I don't think this is the thread for it.


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#30 UncleBob

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Posted 12 July 2013 - 06:46 PM

There are fees to find out how much is on the card. There are fees to move the money into a checking account. There are fees for "statement reprints" (is that just your payroll stub or is that still free?). There are fees for not using your card. A fee for closing your account (is that if you lose your card?). Some employers are not disclosing that these cards are optional as well.


I can't speak for every place of employment, but the ones I'm familiar with, your pay stub is an entierly different document than anything to do with the pre-paid card.

If you withdraw the balance of the card each pay period, then you don't need to find out how much is on the card (you review your paystub). You deposit the money into your checking account with no fees (wait, the employee has a checking account? that means they're in 'the system'!). If you empty the balance of the card, you won't really need statement reprints (again, different than a pay stub). If you're getting your pay deposited onto the card and them withdrawing it each period, then the card isn't inactive, and thus, no fees. If the card is empty when you're done with it (as it would be, since you're getting the balance off at every pay period, right?), then they can't charge you a fee to close it, as there's no way to get the money.

If you think $2 from an ATM is bad, look into the cost of cashing a payroll check for one of the unbanked. Some places charge a flat fee ($3-$10). Some places charge a percent (1% of a, say, $500 paycheck being $5). Thus, by the logic of 'an employee shouldn't have to pay fees to get their money', the employeer should be required to pay in cash on demand, right? That's virtually the only way for an unbanked individual to get their money without any kind of fees.
"The ultimate weakness of violence is that it is a descending spiral, begetting the very thing it seeks to destroy, instead of diminishing evil, it multiplies it."