Social Security receivers, watch out for bank personal cash loan

People on Social Security typically aren’t amenable to giving away their benefits. In part, this is why paper Social Security checks are on the way out. The Wall Street Journal reports that the Treasury Department plans to stop issuing paper Social Security checks by 2013 and distribute monies via direct deposit or prepaid debit cards. The stated goal is to save Social Security recipients money spent cashing the checks and distribute benefits in a more secure fashion. However, numerous consumer groups are now concerned that those Social Security recipients whose funds are directly deposited into accounts at major banks like U.S. Bancorp, Wells Fargo and Fifth Third Bancorp are being targeted for high cost cash advance-style loans by the very same banks.

Bank loans that target low-income seniors, disabled

Collateral for the cash until payday loan loans comes straight from the recurring deposits of Social Security benefits, says the National Consumer Law Center. Such personal loan original via customer phone call or online request. The bank takes the cash loan money out of the consumer’s next receipt of benefits. If the loan isn’t really paid in full within 35 days, the bank automatically withdraws the amount owed, frequently producing overdraft and a morass of fees.

Making up for lost revenue by siphoning from baby boomers

Losing automatic overdraft is something banks fear, as the Wall Street reform bill gets set to become law. It seems like no small coincidence to the National Consumer Law Center that this aggressive push to get Social Security customers into payday loan-like products coincides with the coming of the financial reform law. Sources indicate that as much as $ 700 million in Social Security benefits are taken each year to pay overdraft fees, which draws focus to the magnitude of the issue for America’s monolith banks.

Want an choice to banks fingering your Social Security?

The Wall Street Journal recommends the prepaid debit card option for benefit disbursement. They do not cost much and they’re fully FDIC insured. They can be used like an ATM card, also as for purchases and bill payments.

Find more information on this topic

online.wsj.com/article/SB10001424052748704875004575375474092141764.html

en.wikipedia.org/wiki/Social_Security_%28United_States%29