Missouri, Kansas governments worst in the nation for imposing excessive paycard fees on state employees, report finds

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More workers in the United States are expected to receive payroll cards than actual paper paychecks in 2015, according to the National Consumer Law Center. Payroll cards work basically like a debit card. You can use them anywhere credit cards are accepted, or withdraw cash with them from an ATM. They’re also the preferred payroll instrument for workers who make so little money they can’t afford to (or choose not to) have a bank account. 

Though they’re convenient, payroll cards also sometimes come equipped with terms that result in high fees. Nineteen states — including Kansas and Missouri — now use payroll cards to pay state employees, and the NCLC recently conducted a study assessing the fee structure of every state’s payroll card. Turns out, Kansas and Missouri (along with Virginia) received a giant thumbs-down from the NCLC, which called their fee structures “predatory.” From the report: 

The Kansas and Missouri cards, both provided by NetSpend under the Skylight Financial brand, receive a negative rating because of their overdraft fees. Workers who opt in to overdraft “protection” will pay $25 for each overdraft, up to $125 a month and $450 a year. Overdraft fees are completely unacceptable on payroll cards, and Kansas and Missouri should both be ashamed of paying employee wages on a card that promotes this predatory feature. The Kansas card also had other inappropriate fees, such as fees for every ATM balance inquiry. 

Nebraska, on the other hand, charges “virtually no fees for cash access, purchases, account information or penalties, and also waive[s] some fees at out-of-network ATMs,” according to the NCLC, which lauded the state’s approach to payroll cards. 

The report recommends that the Consumer Financial Protection Bureau reform these practices by issuing rules governing payroll cards that would ban certain kinds of fees, and require all fee schedules to be posted publicly on the CFPB’s website. Read the full report here.