Like many out-of-work Americans, Philip Tressler gets his unemployment benefits deposited directly into his checking account. He could have received the benefits via a debit card that the state also offers.

But Tressler, who was laid off 14 months ago after 32 years working for a grocery store in western Pennsylvania, didn’t go for the card. “It’s just not convenient,” he says, especially since he doesn’t use the same bank that issues the state’s debit card.

But there’s more than inconvenience at issue when it comes to state debit cards for the unemployed. Had Tressler decided to take one, he might have been subjected to a whole array of extra charges, including $1.50 for each withdrawal of cash from an ATM that isn’t “in-network.”

Pennsylvania is among some 30 states that offer debit cards as vehicles for unemployment insurance payments. These cards have their advantages. Workers get their benefits quicker, and states save money. And people without bank accounts can avoid check-cashing fees and make purchases without carrying large amounts of cash But consumer groups, states, and even the banks that issue the cards all say that it’s important for anyone who uses an unemployment insurance (UI) debit card to check the fine print.

“If you are issued your unemployment benefits on a prepaid card, be sure to read the terms and conditions,” says Suzanne Martindale, an associate policy analyst at Consumers Union. Last summer, the U.S. Labor Department offered guidance to states, outlining “best practices” for using UI debit cards. Among the five suggestions: eliminate overdraft charges; allow for more than one free ATM withdrawal per payment; and don’t charge fees when the card is used to make purchases

California a model

Fees and requirements vary widely from card to card and the charges typically depend on the terms of the contract each state has managed to negotiate with the card issuer and how cardholders use them. Those who use the cards like regular consumer debit cards can encounter fees for checking their balances, using ATMs multiple times or calling customer service. US Bank, which handles the unemployment cards in Hawaii, Minnesota, Ohio, Wyoming and other states, charges overdraft fees from $10 to $20, and $2 fees for account inactivity, says Lauren K. Saunders, managing attorney for the National Consumer Law Center in Washington, D.C.

By Pamela M. Prah, Stateline Staff Writer