Prepaid Unemployment Benefit Cards: Rules Have Changed For Collecting Unemployment Benefits on Debit Cards -- Beware of Fees

From The Loop 21:

If you collect unemployment benefits -- (and with a more than 15 percent unemployment rate among African Americans, there's a good chance that you do) -- the rules have changed.

But take it from me: they are not changing in your favor.

Some states are now issuing unemployment benefits on debit cards. And while there's just something about a 2-inch by 3-inch, colorful, plastic little card in the hands of the average American that makes us want to swipe it, believe me when I tell you, that's exactly where the trouble starts.

Same Game, New Rules

In the past when states issued unemployment benefits, you received a paper check in the mail, or the funds were deposited directly into your bank account. But now roughly 30 states issue unemployment benefits on prepaid debit cards.

At first glance, this might seem like a great deal. The states save money by not mailing you a paper check. You receive benefits quicker since funds are deposited onto the card.

And, no bank account? No problem! Using the card means that you can avoid check-cashing fees.

But if this sounds too good to be true, that's because it is.

Less Money, More Problems ...

Prepaid benefit cards come with fees -- lots of fees. Which means banks are making money -- lots of money -- off of your unemployment debit card swipes. In fact, they are now making money from nearly every single swipe of your unemployment card.

If you don't read your card's fine print, you could end up paying for more than just groceries and bills.

The Network Journal reports that according to the National Consumer Law Center ("NCLC" -- one of my favorite consumer groups), some banks charge "overdraft fees from $10 to $20, and $2 fees for account inactivity."

To make it worse, services that are typically free for debit card users (i.e. store purchases, confirming account balances by phone or having a transaction denied) can also cost extra fees.

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Dirty Credit Card Tricks

Say "Bye-Bye" to Your Grace Period
No grace period means that you'll start accruing interest the moment you charge something and that can cost you a bundle of "extra" interest. Most credit card issuers have already reduced their grace period from 25 days to 20 days. Many others have eliminated the grace period altogether. Now they are coming up with more and more reasons to take away your grace period. Miss a payment? Stop carrying a balance? Bye-bye grace period!

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Dirty Credit Card Tricks

Punishing You for Being Smart
These fees are the lowest of the low because they penalize you for being a responsible credit card user. Some of the biggest offenders include charging you a fee for:
+ Closing your account
+ Failing to use a card for a period of time (such as six months or a year)
+ Not carrying a balance
+ Every transaction each and every time that you use your card
If your card charges you any of these fees, it's time to look for a new card!

Dirty Credit Card Tricks

Lowering Your Minimum Payment
Another way some cards try to jack up their profits and lure you deeper into debt is by lowering the minimum payment due on your balance. It used to be cards required a minimum monthly payment of about 4% of your balance, but many now require as little at 2%. Don't fall for it! Going from a $40 payment to a $25 payment on a $2,500 balance means it will take you an extra 19 months to pay off your balance!

Dirty Credit Card Tricks

Inviting You to Skip a Payment
Broke this month? In their infinite generosity (ha!), some cards will "invite" you to skip a payment. This "helpful" offer, which sounds great at first blush, often comes after the holidays when your balance is big and your wallet is stretched. DON'T DO IT! Skipping that payment can lead to a host of trouble from a higher interest rate to possibly having to make extra payments in the future. Are you starting to notice a pattern?! You should be skeptical whenever your credit card company does something "nice" for you without you asking for it!

Dirty Credit Card Tricks

Tricky Timing
We all know that our payment is due on a certain date or it's late, right? But a new twist being thrown into the mix is having your payment due by a certain time on the due date. If your payment is due at noon, and gets processed at 12:01, you get socked with a late fee AND likely a higher interest rate. Gimme a break! Carefully check your statement so you avoid this trap.

SOURCE: Dirty Credit Card Tricks provided by AOL Money & Finance

Dirty Credit Card Tricks

You are charged a fee for withdrawing money from an "out of network" ATM machine. You may be charged for every withdrawal after the first one -- up to $5 per withdrawal in some states. You may even be charged a transaction fee for using the card at a store.

In the style of Dr. Seuss: You'll pay a fee here, you'll pay a fee there. You'll pay a fee darn near everywhere!

Think I'm exaggerating? According to some consumer activists, you could be charged if you:

1. Use the card in the store (ka-ching!)
2. Check your balance (ka-ching!)
3. Use the card at the wrong ATM (ka-ching!)
4. Go over your balance (ka-ching!) ... and
5. Don't use the card at all (ka-ching!)

While you are counting pennies on unemployment, each of those swipes is building up some banker's year-end bonus.

Read page two of 'Prepaid Unemployment Benefit Cards' with our partner, The Loop 21.