Banks Use Payroll Card System to Suck Money from Low-Wage Workers
Many companies employing low-wage service industry employees or part-time employees are using prepaid debit cards to pay their workers, who find themselves paying fees that cut into their paltry salaries.
Taco Bell, Walgreens and Walmart are among the dozens of well-known companies that now use the prepaid cards for their workers. In some cases, employees no longer have the option of being paid by check or direct deposit.
But using the cards usually means paying a fee, such as 50 cents for a balance inquiry, $1.75 for each cash withdrawal, or $2.25 for using an out-of-network A.T.M, or $2.95 for a paper statement, or $7 for not using the cards over a period of time.
The fees can really add up, and represent a big subtraction for an employee making only minimum wage.
The trend of switching to prepaid cards has attracted the attention of New York Attorney General Eric Schneiderman, who is looking into at least 20 employers, including McDonald’s, Walgreens and Walmart.
The biggest issuer of payroll cards is Texas-based NetSpend. JPMorgan Chase, Bank of America, Wells Fargo and Citigroup also profit from the payroll card system, which they argue provides a service for low-income workers who don’t have a bank account. In 2012 there were more than four million Americans using payroll cards.
-Noel Brinkerhoff, David Wallechinsky
To Learn More:
Paid via Card, Workers Feel Sting of Fees (by Jessica Silver-Greenberg and Stephanie Clifford, New York Times)
Payroll Cards Are Under Scrutiny by New York’s Attorney General (by Jessica Silver-Greenberg, New York Times)
- Top Stories
- Unusual News
- Where is the Money Going?
- U.S. and the World
- Appointments and Resignations
- Latest News
- Co-Chair of the President's Intelligence Advisory Board: Who is Shirley Ann Jackson?
- Managing Director of the Council on Environmental Quality: Who Is Christy Goldfuss?
- Executive Director of the Office of Faith-Based and Neighborhood Partnerships: Who Is Melissa Rogers?
- Principal Deputy Director of the United States Mint: Who Is Rhett Jeppson?
- Coordinator of the Bureau of International Information Programs: Who is Macon Phillips?