Educating the World about Payroll Cards, one blog at a time…

Tag: direct deposit

Will Banks Charge Higher Fees in the Future on Debit Cards and Checking Accounts?

The simple answer to this question is: “it depends”.  What does it depend on?  It depends on whether or not the regulations passed by the Federal Government will continue in force, be modified, repealed or possibly even be expanded.  Ever since the housing market meltdown the Federal Government tried to protect consumers from businesses; but it really needed to protect them from government regulations as well.  What does that mean?  It means in 2005 when congressional leaders pushed for Fannie Mae to make more home loans to people, the banks complied and made more loans.  When the housing bubble burst, the Federal Government immediately began pointing fingers at Wall Street and the banking industry for generating a profit by making risky loans to under qualified buyers. Never mind that congress was pushing in that very direction or that consumers were applying for loans on houses they knew they couldn’t afford.  Ok, so how does that impact fees on checking account and debit cards?  The Dodd Frank Bill pushed through congress to protect consumers from Wall Street and banks contained many different components.  One of those was the Durbin Amendment which significantly reduced the fees retailers pay banks for accepting debit cards.  There were also new regulations passed to modify the prices banks can charge consumers on checking account overdrafts.  Finally the Federal Government is heavily scrutinizing loans made by banks and banks have cut way back on lending to avoid scrutiny.  The result of this type of Federal Government regulation is lost business and revenue for the banking industry well beyond what was called for, and eventually they will need to compensate for it somewhere somehow.  What are the alternatives for hard-working consumers?  One option might be to consider a prepaid debit card.  Although these cards do have some fees, they may be less than what your bank may charge for a traditional checking account, you can’t overdraw them and everyone can qualify. Paycards or Payroll cards are one of the best options for prepaid debit cards because they are provided by employers at no cost and employees receive and can access their pay at no cost each time they are paid.   Will there be higher debit card and checking account fees in the future?  Hard to know at this point but one thing’s for sure, the more the Federal Government tries to dictate and control the outcome of “free enterprise”, the less “free enterprise” there will be and that will never be good for hard-working U.S. consumers.

How Can I avoid Fees on My Payroll Card?

All payroll cards and prepaid cards have fees. Sorry, that’s the way it is. While some payroll cards fees may be higher than others, there is always a way to use your payroll card without every paying a fee. Want to know how? Don’t worry I am going to tell you. Read on…

First: All payroll cards have to let you access your payroll deposit 100% free of charge after you get paid. The way that payroll cards usually do this is after you get paid, each time, there are certain transactions that allow you to access all of your paycheck without incurring fees. So if you wanted to transfer your paycheck to a bank account-FREE. Or, if you wanted to withdrawal all of your money at the bank-FREE. There are usually multiple transactions that give you this ability. If you don’t want to take all your money off the card, but still want to limit fees, keep reading.

Second: While not all payroll or prepaid cards offer this, especially not prepaid cards, good payroll card companies will offer free POS purchase transactions. That means when you are buying something at the register, whether you select credit or debit, you won’t get charged a fee from your card. Some even allow you to get cash back with no charge. Prepaid cards are not usually this way, and like I said not all payroll cards are, but there are some good companies out there that do this.

Third: Sign up for text alerts! Or email alerts, or whatever makes you happier. I cannot stress this feature enough.  Balance alerts help cardholders avoid those pesky “Non Sufficient Funds” fees. You can sign up for balance alerts daily, so you know your balance first thing each morning. Or even anytime your balance changes. That is what I do. I know automatically when my payroll hits my card and my balance after every transaction. If I don’t know if I have enough on my card I can either look at my last text or simply request it. If you receive text alerts to your cell phone, there’s a number you can text something to, like BAL or BALANCE, and receive a reply back to you with your current balance. This is a life saver if you are ever in line with a cart full of groceries and can’t remember if you had $50 or $150 left.

Fourth: See if there is a “partner” network your payroll card uses. While you will get charged for withdrawing money from an ATM, if your payroll card partners with a specific network you may be able to avoid additional fees. Some ATMs charge fees beyond what your payroll card company charges. Find the network that does not charge users of your specific payroll card any additional fees. You may still pay the ATM withdrawal fee to your card, but it will be less than paying one to the card and one to the ATM.

Some of these suggestions will help you avoid fees all together. But that may not be practical for everyone. If you can’t eliminate, at least you can minimize.

What scares employees about prepaid cards? Halloween Edition

 Are you an employer that has considered implementing prepaid payroll cards only to have your employees run and hide from the ghouls and goblins of electronic pay? This frightening experience is more common than you think. The largest reason businesses do not implement payroll cards is the scary uncertainty it brings to their employees. Most of the fright for employees is misconception, some is misunderstanding and some is just fear of change. Let’s highlight these below and let you know what you can do to unmask these ghouls and goblins for your employees.

Misconception- Some employees have a skewered view of what payroll cards are and what they can do. Many employees don’t realize they can still get access to all of their money, and at no charge. In a niche where cash rules, employees may have to be educated to the benefits of payroll cards versus cash. For instance no check cashing fees. If it is a MasterCard or Visa Card you can pay bills online or over the phone. Shop online and anywhere the card is accepted. Get your paycheck instantly without having to drive anywhere. Get cash back. For these employees, they may not have had this feature available to them before and may confuse payroll cards with other prepaid cards on the market. A little education and real world examples will help this group of employees feel more comfortable and even excited about payroll cards.

Misunderstanding- Employees in this group may have fears and misunderstandings about how payroll cards work and impact their money. These employees may worry about losing their money little by little with fees. They may worry about being able to get their money off of their card. They may even be worried if they lose the card they lose their money. These are legitimate worries, and may have been valid with previous payroll cards. But payrolls cards have made leaps and bounds in the past few years ensuring consumer protection. Funds are FDIC ensured and if a cardholder loses their card it’s the same as someone losing their debit card, the funds are protected. Many payroll card providers have also limited the fees charged to cardholders. And recent payroll card regulations ensure payroll card providers give cardholders the opportunity to 100% access of their money at no charge. Paper checks don’t even offer that since many times they have to pay a check cashing fee that payroll cards eliminate.  These card holders want to be assured that they can access their money when they want it, and that they are not going to be nickel and dimed in fees. 

Fear of Change- People in general know this fear all too well. For many, the advancing fear of technological progression can be overwhelming. What’s a tweet? Why do I need a Facebook? You can do what with your phone now? This kind of fear doesn’t just happen with technology. This group of employees may feel this kind of fear as well when asked to change their spending and payday routines. Check cashing and fees may just feel easier and less overwhelming to deal with then direct deposit and debit cards. But as with all change, things just get easier as you do it. For many employers, when the choice of change is left up to the employees,  there is minimal adoption.  You know it’s good for your business. You know it’s good for your employees. You just have to implement it and be patient with your employees, and they will accept it.  You may even have them try it for several pay periods and if they don’t like it, you can always go back to checks (although that never happens). According to the NACHA 97% of employees that use electronic pay are satisfied with it. Trust that you are making the right decision for your business and employees.

Don’t be afraid to implement an electronic pay solution for your employees. You are benefiting your employees, saving processing costs for your business and doing your part to save the planet. It may be scary for a little while, but just like some of the ghouls and goblins of Halloween, this too shall pass.

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