ATM

Payroll Debit Cards - Less Choice, Lower Wages

October 5, 2011 by Calitics

by Angie Wei, California Labor Federation

Bank of America's new $5 monthly debit fee, unveiled Friday, sparked howls of protest from furious bank customers now threatening to walk away to more consumer-friendly banking options. No one knows exactly how many will follow through on the threat, but according to one poll, a $5 monthly fee will drive 66% of debit users towards alternative methods of payment—cash, credit cards, or “other.” Agree or disagree with the 66%, but at least everyone can agree that it’s good consumers can freely decide to spend however they want and bank wherever they choose, right? Wrong.

Thanks to unaffordable fees, credit checks and other obstacles, big banks have shut out about a million California households from access to any banking services whatsoever. These “unbanked” workers, unable to receive direct deposit, have in recent years found employers replacing paper paychecks with mysterious “payroll debit” cards—electronic cards that charge massive fees only a banking lobbyist could love. Employers issue cards directly to workers, wages are loaded onto an account managed by the bank, and every payday, the nickel and diming begins anew.