Tuesday, February 28, 2012

More Collusion Between The Government & Big Banks

In some states such as South Carolina, state income tax refunds will be issued via a prepaid debit card through Bank of America (the worst transgressor as banks go for ripping people off). And state governments around the country are using prepaid cards to issue food stamps and welfare. And next year, even the federal government will be issuing prepaids for Social Security instead of checks.

So, why is this a problem?

There are no regulations as to what fees a bank can charge on prepaid cards. In South Carolina, Bank of America will charge the user (mostly lower income people) a whopping $10 for each teller transaction, and $2.50 for every withdrawal from any non-Bank of America ATM. Since a lot of poor rural families do not live near a BofA ATM, that is going to hurt them big time.

And then there is the problem of how to get the last of your money. ATM's generally pay out only in $20 bills. If a family has $18 left on their card, they cannot get it from an ATM - they must either use it at a store (where a debit fee gets paid to the bank) or they would have to go to the bank and forfeit $10 for the transaction fee.

Listen up, Big Brother Government - if you are going to issue a person's money by a prepaid card, you have an obligation to assure that they can use it without as much as a penny in penalty. Otherwise, government is in bed with the banks who stand to make millions, if not billions from this windfall.


No comments: