Gov't Benefits Via E-Check
Americans who receive Social Security and other federal benefit checks can now have the money deposited directly into their accounts electronically under a new banking program aimed at low-income families and elderly.
The Treasury Department in cooperation with several banking institutions has made it possible for federal payment recipients such as veterans and people drawing Social Security to take advantage of the direct deposit option millions of other Americans now have.
"This is going to save a lot of money for families that don't have a lot to spare," said Vice President Al Gore, who announced the changes Wednesday in an appearance with Treasury Secretary Robert Rubin.
Gore said many elderly and low-income Americans have difficult time getting to a bank or do not trust their money with others. They end up paying stiff fees to get their checks cashed elsewhere and are easy prey for thieves, he said.
The payments would be transferred electronically from the government into low-cost accounts. People who have the accounts would be subject to a maximum fee of $3 a month. The accounts would have the same consumer protections that the financial institutions make available to other account holders.
There would be no minimum balance except as required by federal or state law, and account holders would get monthly statements. Financial institutions would decide whether to pay interest on account balances.
Under the plan, the government pays each institution a one-time per-account set up fee. The program is expected to save the government money in the long run by eliminating the costs of mailing and printing benefit checks.
The Debt Collection Improvement Act of 1996 requires most federal payments, except for tax refunds, to eventually be made by electronic transfers. Gore's announcement was a step toward implementing the act.
The first financial institutions to take part in the program are Banco Popular de Puerto Rico & NA; Bank of America; Britton & Koontz First National Bank; Chase Manhattan Bank; Washington State Bank; and Wells Fargo & Co.