COVID & Unemployment

Millions will get their relief payment via debit card. That’s good … and bad

Justin Ho Dec 30, 2020
Heard on:
HTML EMBED:
COPY
President Donald Trump holds one of the prepaid debit cards being issued by the IRS, during a Cabinet meeting in May. Brendan Smialowski/AFP via Getty Images
COVID & Unemployment

Millions will get their relief payment via debit card. That’s good … and bad

Justin Ho Dec 30, 2020
Heard on:
President Donald Trump holds one of the prepaid debit cards being issued by the IRS, during a Cabinet meeting in May. Brendan Smialowski/AFP via Getty Images
HTML EMBED:
COPY

The Treasury Department has already started sending out the new round of pandemic relief payments. The IRS says it started making direct deposits into some people’s bank accounts Tuesday.

People who don’t have a bank account on file with the agency can look forward to getting either a paper check or a prepaid debit card in the mail. The Treasury said it sent out around 4 million prepaid cards during the first round of relief. The cards have some advantages over paper checks — but some drawbacks, too.

People who receive the prepaid debit cards are the most likely to not have bank accounts. Tyrone Ross, CEO of the investing platform Onramp Invest, said they’re the people who are going to need to spend the money as quickly as possible.

“It’s not ‘OK well, can I invest this? Or, can I put it into’ — no. It’s ‘I have needs that have to be met,'” he said. “It’s consumption, and that’s what they want.”

Debit cards can also be cheaper than checks for people who don’t have bank accounts. Cashing a check costs them money. But with a card, said Chantel Boyens with the Urban Institute, “there is a network of ATMs where if you have the card, you can access your funds without any fees.”

But people can only make one withdrawal for free from an out-of-network ATM. After that, it costs $2. Boyens said lower-income people are more likely to pay those fees.

“They may be located in areas where they don’t have as good of access to in-network ATMs,” she said.

The cards also come with terms of service. And Ira Rheingold, executive director of the National Association of Consumer Advocates, said some of them put card users at a disadvantage.

“You, consumer, if you have a complaint, you cannot go to court. You cannot be part of a collective action, a class action,” Rheingold said.

Members of Congress sent a letter to the Treasury this week, asking it to remove those clauses and reduce any fees.

COVID-19 Economy FAQs

Millions of Americans are unemployed, but businesses say they are having trouble hiring. Why?

This economic crisis is unusual compared to traditional recessions, according to Daniel Zhao, senior economist with Glassdoor. “Many workers are still sitting out of the labor force because of health concerns or child care needs, and that makes it tough to find workers regardless of what you’re doing with wages or benefits,” Zhao said. “An extra dollar an hour isn’t going to make a cashier with preexisting conditions feel that it’s safe to return to work.” This can be seen in the restaurant industry: Some workers have quit or are reluctant to apply because of COVID-19 concerns, low pay, meager benefits and the stress that comes with a fast-paced, demanding job. Restaurants have been willing to offer signing bonuses and temporary wage increases. One McDonald’s is even paying people $50 just to interview.

Could waiving patents increase the global supply of COVID-19 vaccines?

India and South Africa have introduced a proposal to temporarily suspend patents on COVID-19 vaccines. Backers of the plan say it would increase the supply of vaccines around the world by allowing more countries to produce them. Skeptics say it’s not that simple. There’s now enough supply in the U.S that any adult who wants a shot should be able to get one soon. That reality is years away for most other countries. More than 100 countries have backed the proposal to temporarily waive COVID-19 vaccine patents. The U.S isn’t one of them, but the White House has said it’s considering the idea.

Can businesses deny you entry if you don’t have a vaccine passport?

As more Americans get vaccinated against COVID-19 and the economy continues reopening, some businesses are requiring proof of vaccination to enter their premises. The concept of a vaccine passport has raised ethical questions about data privacy and potential discrimination against the unvaccinated. However, legal experts say businesses have the right to deny entrance to those who can’t show proof.

Read More

Collapse

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.