On June 30, 2013, The New York Times ran a disturbing article for those considering Las Vegas bankruptcy on employers that switch their payroll systems from paper checks and direct deposits to payroll cards. Payroll cards are prepaid debit cards that replenish every month with the worker’s wages for that month. At first, it sounds like a convenience for both parties: Employers have a near foolproof mechanism for disbursing wages, and workers don’t have to stand in line cashing checks. In truth though, because prepaid cards aren’t regulated as strictly as credit or debit cards are, low-paid workers see their wages confiscated by usurious bank fees, sometimes up to $50 per month. These workers complain that they have to pay to access their money.
Here are four ways to avoid ending up in payroll card bankruptcy.
1. Most employers that use payroll cards still offer workers the option of receiving their wages by direct deposit or checks. The paperwork is sometimes onerous, but depending on the fees involved, you can save a large and important proportion of your wages in the long run.
2. Although payroll cards can come with large fees, sometimes they’re preferable to check-cashing services, which sometimes charge 3.0 percent of the full check. In some of these cases, including the inconvenience of cashing the check, it’s cheaper to use the card.
3. However, check-cashing services charge a one-time fee while payroll card fees will be charged with each use. Sometimes payroll cards are assessed fees for non-use as well, often a $7.00 inactivity fee. Consequently, some of the workers interviewed determined that the best solution was to go to the cheapest ATM and withdraw their entire paychecks as soon as possible. They then stored the cash in a shoebox in their homes. This strategy can save fees, but it does raise the risk of losing everything in a robbery or mugging. Most banks offer free checking and banking, so opening an account can prevent any sudden loss.
4. Finally, some payroll card banks, such as Citigroup, do provide fee-free cash withdrawals from payroll cards at their ATMs. If you are paid by payroll card, ask your employer if this is true, and then do whatever you can to find the nearest free ATM.
You can read the Times‘ article here.
If you are running into financial difficulties due to your payroll card, and you have a lot of credit card debt, then talking about your situation with an experienced Las Vegas bankruptcy lawyer can help you assess your options.
For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Freedom Law Firm Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-803-9251 to set up your free consultation.