Payroll cards are a rip-off

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Employers who have been forcing low-wage employees to take their pay on a payroll card have been reprimanded by the Consumer Financial Protection Bureau.

The CFPB reminded employers that they must also offer an alternative of direct deposit or a check. Even if you don’t have a checking account, using a check cashing service will generally be less of a rip-off for you.

Here’s the deal with payroll cards: Banks who were looking for more revenue enticed employers with the promise of lower costs for handling payroll. What employers weren’t asking when they signed up for these programs is how the banks make their money.

In reality, the banks charge a bunch of different fees on the cards, from fees to check the balance to fees when you want to withdraw money from your own payroll account! I can’t think of any circumstance when this would ever make sense for you as a user.

If you’re an employer and get the pitch from the banks, ask the right questions because without realizing it, you’re selling employees down the river…and that’s no way to earn their loyalty.



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