- All banks that provided subsidized banking accounts are informing customers of the impending closure of the federal customer benefits program on Aug 8.
- It is estimated that this closure will affect approximately 100,000 individuals
- However, consumers can continue receiving their benefits using the DirectExpress debits card and typical bank accounts.
This summer heralds the end of the low-cost banking federal program. But what this means for the program’s enrollees? It implies that you need to look for another option to continue receiving your benefits from the Treasury Department’sElectronic TransferAccountProgram. Accordingly, the program is slotted to close on August 8.
Doing so will let members continue enjoying better services and convenience. Even so, the end of this program is expected to work out smoothly. Currently, banks are working extra hardto ensure a smoothtransition phaseforall participants. About100,000 members will be affected byits closure.
What is the Treasury Department's Electronic Transfer Account Program?
Created in the 90s, the program facilitated the electronic collection of checks by individuals without bank accounts. In 2013, Social Security reforms made it mandatory that Social Security benefits should be collected electronically going forwards. Although not all banks provide accounts, those that did receive government subsidies. But banks had to abide by various government regulations. Banks had to levy a maximum fee of $3 and offer three free withdrawals each month. On the other hand, banks were not supposed to provide checks as well as had to desist from issuing any automatic recurring payment options.
In its place, the federal government has created another instrument to facilitate the collection of Social Security benefits. This instrument is known as the DirectExpress debit card. With this card, you can collect your monthly Social Security benefits, has no monthly fees, make purchases, withdraw cash as well as pay recurring bills.
How does TSP work?
However, unlike the soon to be closed program that relies on bank accounts, there are restrictions with the new program. Banks will only offer one free monthly withdrawal. Also, your bank reserves the right to convert your account type. Conversion may occur automatically, and you might be expected to open a different type of an account. Note that you may be required to pay processing fees which you didn’t do with the previous program. Despite that, it is not a must that you remain with your current bank. You have the option of opening an account with some other bank of your choice.
Given that, you are free to use any financial product or service provider available in the market. Luckily, if you desire to do so, there are many options available in the marketplace today. These providers are more than what was available during the launch of the soon-to-be a defunct program.