Caveat Emptor or Bust!

Things continue to change. If you are collecting unemployment benefits in certain states, you won’t be receiving a check – you’ll get a debit card. (Technically, you’re getting a stored-valued card, but that’s post for another day…). Suddenly, the plastic generational behavior kicks in and here I go talking about what you’re getting in to. Yeah – that financial education thing.

The issuance of debit cards can save the state a lot of money – and it’s good business for the financial institution.

Thirty states have struck such deals with banks that include Citigroup Inc., Bank of America Corp., JP Morgan Chase and US Bancorp, an Associated Press review of the agreements found. All the programs carry fees, and in several states the unemployed have no choice but to use the debit cards. Some banks even charge overdraft fees of up to $20 — even though they could decline charges for more than what's on the card. (That’s why they call it a stored-value card dude!)

Another 10 states — including the unemployment hot spots of California, Florida and South Carolina — are considering such programs or have signed contracts. The remainder still uses traditional checks or direct deposit. In 2003, states paid only $4 million of unemployment insurance through debit cards. By 2007, it had ballooned to $2.8 billion, and by 2010 it will likely rise to $10.5 billion, according to a study conducted by Mercator Advisory Group, a financial industry consulting firm.

The banks say their programs offer convenience. They also provide at least one way to tap the money at no charge, such as using a single free withdrawal to get all the cash at once from a bank teller. But the banks benefit from human nature, as people end up treating the cards like all the other plastic in their wallets.

In these times, it’s all about the dollars. And personal responsibility.

Caveat Emptor – Let the Buyer Beware Good article. http://www.msnbc.msn.com/id/29286993/