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Social Security Stops Paper Checks: Protect Yourself

Social Security checks are all direct deposit. No more paper checks mailed to you unless you are 90 years old or more.

Stopping check mailings will save the taxpayers $120 million a year as Social Security distributes more than $500 billion a year to 50 million people.

But millions of Americans don’t  have a bank account in which to place their Social Security benefit. No place for direct deposit

You can use a prepaid debit card to collect your benefits. You can then use the card to get cash from a bank ATM, or buy goods at a store.

The Treasury Department recommends that you use a debit card called Direct Express, which has lower fees than many of the cards on the market.  “Our concerns are that people who right now are going to check-cashers or payday lenders to cash their paper checks might be talked into prepaid cards that are not as good for them as the DirectExpress card,” according to Lauren Sanders, managing attorney with the National Consumer Law Center.

The first withdrawal from an ATM is free with the DirectExpress card. Additional withdrawals cost 90 cents each, plus fees for  using an ATM that is not in the card network. There is no charged to get cash in person from a bank teller. You can get cash back when you buy something in a store, and there is no charge for getting cash that way.

Also, other prepaid cards don’t come with the same federally mandated protection for loss or theft, she said. “Most prepaid cards have some voluntary protections [in the contract’s fine print], but they’re not covered by federal law in the same way.”
With the DirectExpress card, “if someone makes an unauthorized charge, you are liable for no more than $50 if you report the loss or theft within two business days of learning about it,” according to NCLC. Read more on NCLC’s fact sheet here.

If you are 90 or older as of May 1, mentally impaired, or live in a remote area that won’t support electronic financial transactions, you may be able to continue to receive paper checks.

Written by Bob Rosenblatt

Bob Rosenblatt is a researcher, writer and journalist who helps people looking for up-to-date answers and information on the perplexing issues at the intersection of finances and aging. Bob publishes a weekly report — please take a moment to subscribe in the upper right hand corner of this page.

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