New Direct-Deposit Bill Reduces Government Check Writing
Date: Oct. 22, 1997
Editor: D'Lyn Ford (505) 646-6528, dlford@nmsu.edu
LAS CRUCES -- A new bill is being proposed to put the government out of the check-writing business. The new direct deposit plan will affect people who receive federal benefits such as welfare, social security and veterans' payments, said a consumer education specialist with New Mexico State University.
"Proposers estimate the plan will save the government about $500 million in check-writing costs," said Susan Wright, with NMSU's Cooperative Extension Service. "Anyone who receives government benefits, including welfare and social security, would have the money directly deposited to their bank."
People receiving social security have the direct deposit option now, she said. "But by 1999, individual checks will not be used."
The new plan will require people who may not be accustomed to dealing with banks to open accounts. "In the past, some people have felt they couldn't trust banks or afford the fees associated with having an account," Wright said. "However, the banks will be working with the government to establish low-cost accounts."
People who receive federal benefits will be issued a benefit security card that will function like an automated teller machine (ATM) card, Wright said. They will be able to withdraw money from their accounts by using the card in an ATM, or they can use the card for purchases, much like New Mexico's Electronic Benefits Transfer (EBT) cards. The EBT cards are used by some families in place of food stamps. Each month, a specific amount of money is available for grocery purchases with these cards.
"As an added bonus, the proposed bill will reduce the number of checks that are lost or stolen each year, currently as many as 800,000," Wright said.
The bill hasn't passed yet, but it most likely will, she added. For more information about direct deposit of welfare, social security and veterans' payments, contact the government agencies responsible for those benefits.