The Treasury Department’s Electronic Transfer Account program will soon be shut down. Consumers who use this as a way to receive their Social Security or other federal benefits will need to transition to a standard bank account or find another option.
A federal program that offers a low-cost banking option to access federal payments such as Social Security is coming to an end this summer.
Anyone who participates in the Treasury Department’s Electronic Transfer Account program should make sure they line up another way to receive their benefits. The program will shut down on Aug. 8.
„It’s in the interest of the account holder to find something else that undoubtedly has better features and conveniences,“ said Thomas Santaniello, legislative and public affairs specialist with Treasury’s Bureau of Fiscal Service.
Santaniello said, however, that those account holders won’t be left in the lurch.
„People won’t be left without a means of receiving their federal benefits,“ Santaniello said. „The feedback we’re getting from banks is that transitioning customers to other accounts is working well.“
About 100,000 people will likely be affected by the program’s closure.
When Treasury launched the program in the late 1990s, it was a way for consumers without a bank account to have their checks reach them electronically instead of in paper form. And since 2013, Social Security benefits must be received electronically.
While not all banks have offered the accounts, those that did were given a government subsidy. The accounts were required to meet a variety of federal guidelines, including a maximum monthly fee of $3 and at least four free cash withdrawals each month. However, check-writing and recurring automatic bill payments were not allowed.
Although this program is disappearing, another federally sponsored option remains available: the DirectExpress debit card.
With this, your Social Security payment (or other federal benefit) is put on your card, which comes with no monthly fee and can be used to make purchases, pay bills or withdraw cash.
However, like the accounts that are going away, the cards come with restrictions, such as one free ATM withdrawal monthly.
Banks that have participated in the program that is ending are alerting their affected customers. Depending on the institution, your account might be converted to another one at the institution.
If the conversion doesn’t happen automatically, you should be offered the chance to open another type of account at your bank. Be aware that a conversion could mean facing fees you aren’t accustomed to paying.
Of course, there’s no requirement that you remain with the bank where you’ve held the account.
„People have the freedom to use any financial product on the market, which are prevalent and diverse compared to 20 years ago when we first created the program,“ Santaniello said.
