The U.S. Treasury Department announced today the “Direct Express” card. This card could set a new standard for prepaid cards, with real consumer protections and no nasty overdraft fees.
The Treasury describes its new card at: http://fms.treas.gov/news/press/financial_agent.html
Starting this Spring and Summer, the card will be available to people receiving Social Security payments. The new cardt will be most useful to people who don’t have a bank account but still want the speed and security of direct deposit, and the convenience of a debit card. People who have direct deposit of Social Security payments to their bank accounts won’t see any change.
The Treasury Department has done some things right with this new card. According to the details reported today by the Wall Street Journal, the card won’t include an overdraft fee, something that has been a hidden escalator in the true cost of holding many of the prepaid cards now on the market. Unlike with most prepaid cards, consumers will be able to get a statement for a small fee. Treasury says the card will have PIN protection and full consumer protections, known as Regulation E protections.
Consumers will have to pay to use the card: the WSJ reports that the cost will be 90 cents per ATM withdrawal after the first withdrawal in a month, plus any ATM surcharge if the ATM used isn’t a PNC or 7-11 ATM. Statements will cost an extra 75 cents a month, and they will be a 50 cent for each online bill payment.
Consumers Union hasn’t seen the full details and contract for the card yet, so watch for future posts pointing out any hidden surprises. In the meantime, anyone thinking of purchasing a prepaid card should be looking for something at least as good as the Treasury Direct Express card.