Credit Scores and Reports

An employee guide to pay cards


Paper paychecks are becoming a thing of the past, with plastic payroll debit cards (or pay cards) taking their place. Here’s a rundown of what you need to know

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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 carefully.

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 internationally.

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:

  • ATM and POS transactions, plus additional possible surcharges to the ATM owner.
  • Account inactivity.
  • Account maintenance (usually a monthly fee).
  • Replacement card fee.
  • Overdrafts (if applicable).
  • Online or phone account management/access.
  • Speaking 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


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The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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