Government Benefits to Require Prepaid Debit Card or Direct Deposit by 2013
Millions of Americans will join the ranks of prepaid debit card users over the next few years, as government officials announced plans to eliminate most Treasury check payments by 2013. According to the Office of Management and Budget, current recipients of government benefit checks will have eighteen months to prepare for the switch. After March 1, 2011, Americans who apply for new assistance programs, including unemployment and disaster relief disbursements, will no longer have the option to receive paper checks.

The change comes at a critical time for a financial industry that has forced itself to adapt to Americans' changing money management habits. "Unbanked" consumers prefer to handle financial transactions at convenient retail locations, especially as many traditional banks have curtailed free checking options.

Many prepaid debit and credit cards now offer the same access to ACH networks, the systems that enable direct deposits to standard bank accounts. While government agencies expect to save roughly $50 million per year in processing costs, prepaid debit card users may save hundreds of dollars per year by paying debit card reload fees instead of more expensive check cashing fees.

About the Author


Joe Taylor Jr. is an internal business consultant for a Fortune 500 company, who writes about finance, culture, and design. He holds a Bachelor of Science in Communications from Ithaca College.