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 Treasury has plans to phase the checks out by 2013 and send funds via direct deposit and prepaid debit cards, writes The Wall Street Journal. The intention is to save taxpayer dollars and make benefits more secure. But as outlined by many consumer groups, this will open the door for big banks like Wells Fargo and U.S. Bancorp to aggressively market option cash advance-style loans to their Social Security customers.
Fixed income guests are the target of bank marketing
Collateral for the cash advance loans loans comes straight from the recurring deposits of Social Security benefits, says the National Consumer Law Center. Such personal cash loan original via customer phone call or online request. When the next benefits check comes via direct deposit, the bank takes its cut for the cash now service. The real trouble begins if a bank-issued pay day loans isn’t paid at maturity (35 days): full automatic deduction, regardless of overdraft.
Making up for lost revenue by siphoning from baby boomers
Considering the upcoming law status of the Wall Street reform bill, banks are scrambling to generate revenue wherever possible. The National Consumer Law Center believes this may be a big reason why these larger banks are aggressively pushing payday loan products to Social Security recipients. 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.
What can you do to escape the bank Social Security trap?
The Wall Street Journal recommends the prepaid debit card option for benefit disbursement. They’re low cost and FDIC insured. They can be used like an ATM card, as well as for purchases and bill payments.
Additional information at these websites
online.wsj.com/article/SB10001424052748704875004575375474092141764.html
en.wikipedia.org/wiki/Social_Security_%28United_States%29
