Since 2011, California unemployment and disability insurance recipients have been paid via debit cards instead of paper checks. There are many benefits to the debit card system, including:
- no more checks lost in the mail
- payments received on a regular schedule, allowing for better budgeting
- added convenience of point-of-sale (POS) transactions in addition to ATM and teller withdrawals
The cards themselves feature a beautiful photograph of Yosemite and resemble standard VISA debit cards except that there is no bank name or logo on the front of the cards.
Partnership with B of A and Fee Controversy
In a partnership with California EDD, Bank of America issues the cards and manages the associated funds. This gives recipients the protection and service of one of the nation’s largest banks, as well as the convenience of a large network of branches and ATMs in the San Francisco Bay Area and beyond.
While the majority of transactions and services associated with the EDD cards are free, the program does include some fees. For example, cardholders are allowed to make a limited number free withdrawals at non-Bank of America ATMs each month, and are charged for additional non-B of A withdrawals.
The fees are intended to help Bank of America cover the costs associated with program administration, which seems reasonable. However, the partnership between EDD and B of A also includes a revenue-sharing portion, which has already generated more than $7 million for the State of California since 2010. Articles and blog posts dating back to 2011 have called out this seeming contradiction—the state receives income that comes directly from the unemployment and disability benefits paid to its residents.
What You Can Do
Fortunately, the EDD Debit Card fees are completely avoidable, especially if you already have a bank account. Your first priority should be to educate yourself regarding the rules of the program, specifically the Fee Schedule, which appears toward the bottom of this document. Next, consider having your unemployment or disability benefits paid via direct deposit into your primary bank account. As described here, this is an arrangement made directly with EDD, not B of A. Lastly, be wise about your use of EDD benefits and remember that they may be considered taxable income from a federal tax standpoint.
For More Information
The Menlo Partners blog contains additional resources for the unemployed, as well as job search strategies, career advice, and hiring tips for employers. Menlo Partners Staffing provides temporary staffing and direct hire, contingent recruitment services for roles within accounting, administration, finance, human resources, marketing and operations. Contact us today by phone at 650-752-6193 or by email at firstname.lastname@example.org.
Image courtesy of http://www.edd.ca.gov/images/content/EDD_Debit_Card_large.jpg