Washington – For hundreds of thousands of workers losing their jobs during the recession, there’s a new twist to their financial pain: Even as they’re collecting unemployment benefits, they’re paying bank fees just to get access to their money.
Thirty states have struck such deals with banks that include Citigroup Inc. Bank of America Corp. JP Morgan Chase and US Bancorp an Associated Press review of the agreements found. All the programs carry fees.
Citigroup’s bill to the state: zero. The bank collects fees paid by merchants and the unemployed.
“It’s a racket. It’s a scam,” said Rachel Davis, a 38-year-old dental technician from St. Louis who was laid off in October. Davis was given a MasterCard issued through Central Bank of Jefferson City and recently paid $6 to make two $40 withdrawals.
The market of bank-issued unemployment cards is booming, and the millions of recently unemployed are footing the bill.
In 2003, states paid only $4 million of unemployment insurance through debit cards. By 2007, it had ballooned to $2.8 billion, and by 2010 it will likely rise to $10.5 billion.
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