Should You Sign Up For Go Direct or Direct Express?

The deadline to switch from paper checks to electronic payments, or direct deposit, for payments of Social Security, VA, or other federal benefits from the U.S. Treasury is by March 1, 2013.

The mandatory change is expected to save taxpayers $120 million a year. Recipients, or those who will be applying for federal benefits soon, can choose between Go Direct or Direct Express to receive their benefit payments.

Who is affected by the change in electronic payments?

• Recipients of Social Security (retirement benefits)
• VA (veterans benefits)
• Supplemental Security Income (SSI)
• Railroad Retirement Board
• Department of Labor (Black Lung)
• Office of Personnel Management

Are there exceptions?

Yes, in certain circumstances. Automatic waivers are granted to those born on or before May 1, 1921. Waiver applications can be requested by calling 800-333-1795 for those living in remote areas without sufficient banking infrastructure and those who would experience a hardship due to mental impairment. More information and a FAQ can be found on the Go Direct website.

What is The Direct Express Card?

The Direct Express Card is a prepaid debit MasterCard card that is issued by Comerica Bank. Federal benefit payments are sent to the card without requiring a bank account. You can use the card just like any other debit card to make Point of Sale (POS) purchases, pay bills, or get cash from an Automated Teller Machine (ATM). There are no monthly account service fees, but some optional services have a fee.

You can get cash anytime without a fee at any bank or credit union teller. Card holders are allowed one free ATM cash withdrawal, per deposit, each month using a network ATM. Extra withdrawals from an ATM will cost $0.90 each. If you use an out of network ATM, you will have to pay the ATM owner’s surcharge.

What Is Go Direct?

Go Direct is the direct deposit option for recipients of federal benefits. With direct deposit, the U.S. Treasury automatically sends your benefit payment to your bank or credit union. You won’t have to make a trip to the bank to deposit your money. The exact amount of your payment is directly sent to your account and available on the due date.

What If I Don’t Have A Bank Or Credit Union Account?

You can visit your nearest bank branch or credit union and open an account. Many financial institutions have free checking accounts available for customers who will direct deposit their federal benefit payments. They will even offer you an ATM Debit card and free checks. Some even have interest earning privileges with no minimum balance.

What If I Have Bad Credit?

The U.S. Treasury can provide you with an Electronic Transfer Account (ETA) at participating financial institutions. The participating banks, credit unions, and savings and loans are required to open a low-cost ETA for recipients of federal benefits. They can only deny you an account if they are aware of any fraud of misuse from a previously held ETA.

Which Option Should I Choose?

The choice between the Go Direct and the Direct Express option should be based on factors that are important to you. You should weigh costs, convenience, and accessibility. Here are some considerations:

Choose Go Direct (Direct Deposit)

• If you already have an established bank account and are happy with your financial institution.
• If you can open a bank or credit union account that will provide you an ATM Debit card with no fees.
• If you do business at physical branches of the bank where you are a member.
• If you don’t have any of the Direct Express network ATMs close to where you live and frequent.
• If you want the convenience of online banking, or banking via apps on a mobile device.
• If you have poor credit and want to open an ETA at a participating financial institution.
• If you want the convenience of having other financial products and services available to you from one institution.
• If you want to earn interest on the money you save.

Choose Direct Express (Card)

• If you don’t have an existing bank account and don’t want one.
• If you don’t have access to a bank or credit union.
• If you want to be able to visit any bank or credit union teller to withdraw cash.
• If you have surcharge-free network ATMs close to where you live and frequent.
• If you have poor credit and don’t want to open an ETA at a financial institution.
• If you previously had an ETA and had it closed because of fraud or misuse.
• If you don’t need the convenience of having other financial products and services from one institution.
• If you don’t care about earning interest on the money you don’t spend.

Personally, if I were receiving federal benefits, I would choose the Go Direct option. I think it’s a better deal to open a checking account and direct deposit my payment to an online bank like USAA or Ally, where there are no monthly fees. They also reimburse ATM fees so you’re not limited to in-network ATMs. Additionally, the Direct Express option makes no mention of interest on money that is saved. That’s a pretty raw deal for Americans who don’t spend every dime they receive. Online banks generally have higher interest rates and make up for the lack of physical branches with excellent customer service.

What do you think about the mandatory switch from paper check to electronic payments? If you’re in the process of making the change, which option will you choose and why?