An employee guide to pay cards
Paper paychecks are quickly becoming a thing of the past
By LaRita Heet
When Wal-Mart announced it was doing away with paper paychecks for half of its 1.4 million employees in the United States, a trend was set. Making the transition from paper to plastic payroll raises a slew of questions and concerns, much as direct deposit did when it was introduced in the 1980s.
Experts, including Consumers Union, a nonprofit
consumer advocate organization, urge you to ask your employer the following
questions before you get a pay card:
What security measures are tied into the card? Some
pay cards, especially branded cards, are insured through the FDIC or by Visa or MasterCard-backed zero-liability protection (including fraud protection), while
others provide no such security measures, says Mary Kae Marinac, spokeswoman for pay card vendor Payoneer.
Which merchants accept the pay card? If the card is branded (Visa, MasterCard), most merchants will accept them. Some merchants, however, will not accept an unbranded pay card.
Can I use the card at ATMs? Generally, yes. Find out if there are
certain ATMs you can use without paying transaction fees and whether you have
a limit on the number of ATM transactions.
Can the card be overdrawn? While some payroll cards
will not allow you to take out more money than you have in the account, others
charge you hefty overdraft fees of $29 or more. Track your account balance
What benefits are offered with the card? Many pay card
programs offer a range of benefits or services, including auto bill pay,
low-cost checks or money orders to pay bills from the account or to send money
How many and what type of fee-free transactions come with
the card? Usually, an employer can negotiate with the vendor regarding what
type of free access you have to your account -- including online or
phone account management, account balance text alerts and phone assistance from
customer service. In addition, the law requires employers to provide a specific
minimum number of fee-free transactions. This number usually varies by state,
but typically, employers provide one free ATM transaction per pay period.
What are the fees? Consumers Union says that the fees
associated with using a pay card "make a big difference in whether or not a
payroll card is a good deal for you."
Possible fees include:
and POS transactions, plus additional possible surcharges to the ATM owner.
maintenance (usually a monthly fee).
or phone account management/access.
with live customer service representative.
See related: More employees say 'hello' to payroll cards, Study: Prepaid cards full of hidden dangers, Consumer groups ask FDIC for prepaid card protections, 9 ways to budget with a prepaid card
Published: September 29, 2009