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Plan Well, Retire Well

Saving and investing your money

Direct Express Debit Card: ATM Withdrawals Could Cost You

Last week I wrote about Go Direct, the US Treasury's effort to have all recipients of Federal payments such as Social Security, SSI, and veteran's benefits receive those payments electronically. If recipients don't sign up to have their payments automatically deposited to a bank or credit union account, they will receive a Direct Express debit card and their benefits will be loaded onto the card each month beginning in March 2013.

I recently researched other prepaid debit cards that we can buy, use, and re-load. The fees on some can add up quickly, and some have fees for something as basic as making a purchase. Not so for the Direct Express card: there are very few fees, and it would be easy to use the card without ever paying a fee.

But there is at least one thing that could trip up users and cost them: ATM withdrawals. As I said last week, card users can make one free ATM withdrawal for each benefit payment they receive on the card. After that, there are actually two kinds of fees that they could pay:

Direct Express will charge you $0.90 per withdrawal. That's not a lot, unless you're taking multiple withdrawals of just $10 or $20 at a time. Unfortunately, that's what we saw in Illinois a number of years ago when public recipients starting having benefits deposited on their LINK cards. They had no experience with ATMs. When they read or were told that they could take their money out in increments of $20, some thought they could only withdraw $20 at a time. The result? Lots of fees from both the LINK card and the owner of the ATM.

If you're not using an ATM that belongs to the Direct Express® card surcharge-free ATM network (see FAQ #4.5) you'll also be paying a surcharge to the bank that owns the ATM. According to, ATM surcharges averaged $2.33 in 2010, and 99% of banks charge a fee when non-customers use the bank's ATM.

According to Direct Express FAQ # 4.7, the card issuer does not impose a limit on the amount you can withdraw at one time from an ATM - but the bank that owns the ATM can, and probably will, impose a limit. According to the FAQ, "ATM owner's daily ATM withdrawal limits typically range from $200 to $1,000."

Here's the moral of the story: individuals who are not accustomed to using banks and ATMs may not fully understand the consequences of multiple withdrawals from ATMs. They may also not understand the importance of looking for a bank that is part of the surcharge-free network. If you know someone who will be getting a Direct Express card, help them understand easy ways to use the card for free: make purchases, get cash back when you make a purchase, or see a bank teller to get your cash.

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by Investment advice Investment advice on Friday 10/7/2011

I would argue that debit cards are still the better card option for college students than credit cards, even though banks are spending heavily to convince you otherwise( Using debit cards teaches you how to use money responsibly, because you spend what you've already deposited into your bank account. Even peer pressure cannot force you to spend more than that, which is not at all the case with credit cards and we know how easy it is for a young person to get in huge debts. The lesson is well worth $3 or $5 a month.
by J. G. on Friday 10/28/2011

Thanks for your comments. It's interesting to me that so many consumers are confused about exactly what a debit card is and how it differs from a credit card. Your points help draw that distinction.
by Karen Chan on Tuesday 11/1/2011

cancel my card
by selena ford on Saturday 3/17/2012

Can i withdraw 700.00 from a bank with direct express debit card
by william salgado on Thursday 11/1/2012

If you have $700 loaded on your Direct Express Debit Card, then you should be able to withdraw it at an institution that works with MasterCard.
by Kathy Sweedler on Friday 11/2/2012