Just because they caused the recession doesn’t mean the banks aren’t going to nickel and dime their victims to take advantage of it. According to the AARP bulletin, banks are happily allowing states to direct deposit your unemployment checks, and the banks are happily charging you fees to get at the money. This is done for your convenience, of course.
For hundreds of thousands of workers losing their jobs during the recession, there’s a new twist to their financial pain: Even as they’re collecting unemployment benefits, they’re paying bank fees just to get access to their money.
Thirty states have struck such deals with banks that include Citigroup Inc. (NYSE:C) , Bank of America Corp. (NYSE:BAC) , JP Morgan Chase and US Bancorp (NYSE:USB) , an Associated Press review of the agreements found. All the programs carry fees, and in several states the unemployed have no choice but to use the debit cards. Some banks even charge overdraft fees of up to $20 — even though they could decline charges for more than what’s on the card.
“It’s a racket. It’s a scam,” said Rachel Davis, a 38-year-old dental technician from St. Louis who was laid off in October. Davis was given a MasterCard issued through Central Bank of Jefferson City and recently paid $6 to make two $40 withdrawals.
The banks say their programs offer convenience.
Although the banks are doing this out of kindness to help you during these extremely stressful times, it turns out that as a side effect, they’re actually making a killing on the scam plan.
In Missouri, for instance, 94,883 people claimed unemployment benefits through debit cards from Central Bank. Analysts say a recipient uses a card an average of six to 10 times a month. If each cardholder makes three withdrawals at an out-of-network ATM, at a fee of $1.75, the bank would collect nearly $500,000. If half of the cardholders also dial customer service three times in any given week (the first time is free; after that, it’s 25 cents a call), the bank’s revenue would jump to more than $521,000. That would yield $6.3 million a year.
In case, you’re not quite getting how the banks are making things convenient for you, the next snippet oughta clarify things.
Arthur Santa-Maria, a laid-off engineer who lives just outside Albuquerque, N.M., said he didn’t pay any fees the first time he was laid off, for several months in 2007. His unemployment benefits were paid by paper checks. He found a new job last year but was laid off again last fall.
This time, he was issued a Bank of America debit card — a “prepaid” card in industry lingo — but he was surprised to learn he had to pay fees to get his money. He asked the bank to waive them. It said no. That’s when Santa-Maria called back to ask how to check his account online. He logged on and saw that the call cost him a half dollar. To avoid more fees, Santa-Maria found a Bank of America ATM at a strip mall and withdrew $80 at no charge. When he got back to his car, he decided to take out the rest of his money — $250 — and deposit it in his bank account.
Afterward, Santa-Maria logged on to his account and saw a charge of $1.50 for two withdrawals in one day.
You see now? If you make two withdrawals in one day, you’re being inefficient with your time, so the bank punishes you for your own good to teach you not to make two withdrawals in one day and thus be a more efficient person. The banks aren’t scamming you with unnecessary fees they’re improving you through operant conditioning.
