States Hit Jobless With Junk Fees

Forget unemployment checks. If you're out of work, there's a good chance that your state unemployment benefits will be loaded onto a prepaid debit card. That saves the state money on processing checks and can be helpful for consumers who don't have regular bank accounts.

The problem? Dozens of states allow the banks that issue these debit cards to load them with junk fees for services that would normally be free -- like checking your balance or making a simple purchase, according to a new study from the National Consumer Law Center.

With the typical unemployment check delivering just $294 per week -- barely a third of the average consumer's weekly wage -- the fees are particularly egregious, depriving the the down and out of much needed income. And what's more telling is that the fees are not standard. The same banks charge different fees in different states, indicating that it's the state -- not the bank -- that's allowing their citizens to be nickeled and dimed to death.

For instance, out of the 40 states issuing unemployment benefits via debit card:

• 22 charge to use ATMs in your own network. All of them charge to use out of network ATMs
• 24 charge if you want to know your balance -- and in a true Catch 22, if you try to use your card and you don't have enough to pay (because you didn't check your balance) 24 cards will charge you to deny the transaction.
• 16 charge for calls to an automated customer service menu
• 28 cards charge inactivity fees. Yes, you get charged if you don't use the card.

• Illinois and Tennessee charge every time a consumer needs to get cash -- even at the issuing bank's ATM. The fee for getting cash at the ATM is 95 cents in Illinois; $1 in Tennessee.
• Rhode Island, Maine and Tennessee charge "point of sale fees" when you buy something. (Colorado does too, but you get a couple of transactions for free.)
• Alabama, Connecticut, Iowa, Rhode Island and Tennessee are Catch-22 states. If you want to check your balance, you pay a fee. If you try to buy something and don't have enough, they'll charge a fee to deny your transaction.
• Most states don't charge inactivity fees for at least a year, but if you don't use your Alabama card for 90 days, you get hit with a $2.50 "inactivity" fee. In these four states, you get hit after 180 days: Idaho ($2); Michigan ($3); Missouri ($2.50) and Oregon ($2).