A Guide to the Unemployment Debit Card
How to use it, and how does it work?
You've been approved for Unemployment Benefits, now what? In most states, the default way of getting your payment is through a Pre-Paid debit card. This may be a new concept for some, who are used to getting paid through checks or through direct deposit, but never got paid using a debit card, so this concept may seem confusing at first. You can check your state's handbook to see what other payment methods are available. Some states also offer payment through direct deposit or checks. But in most cases, if you don't directly opt-in to one of the other payment methods, you will receive a debit card soon after your claim is processed.
Getting the Card
The debit card is issued through a bank, such as Bank of America, U.S. Bank, or KeyBank. See here for a list of
all card issuers by state: Unemployment Debit Card Issuing Banks.
The card looks like any other
debit card you've seen, and also bears a logo of one of the major credit card such as Visa or Mastercard.
It usually takes 7-10 days after claim is processed to receive your debit card, although most cards allow
you to have it expedited for a fee by calling the issuing bank. The first step after you receive your card is to activate
it. The letter you receive with your debit card will contain activation instructions. The debit card can usually
be activated online, or by phone. When activating the card for the first time, you will also be setting up your 4 digit pin, if
that was not sent to you separately by mail.
Once activated, you can use it immediately. You should verify and check the balance
on your card to make sure all your benefits are there, and you should constantly keep track of your balance and your spending.
Note that some states issue the card before payment is processed, in such case your card may have a zero balance upon
receiving it and you will want to wait until funds are deposited to it. Once the card is issued, all benefits
will be deposited to the same card. You won't be receiving a new card every week. Also you should keep the card
after you go back to work, as in most cases if you apply for unemployment insurance again in the future, the
existing card will be used which will save you time. Your card will look similar to one of these:
Using the Card
You can use the debit card just like you would use a regular debit card, wherever debit cards are accepted. You can also use it as a credit card, but note that you can only use up to the available funds, you won't be able to charge more than what is available. There is also no line of credit attached to this card, and it does not affect your credit score in any way. Just like with other debit cards, you can get cash back from retailers that allow it. You can use your debit card to withdraw cash at an ATM. You should withdraw from ATMs of the bank which issued the debit card, as withdrawing from out of network ATMs usually incurs a fee, while using an ATM from the issuing bank is free. Refer to the schedule of fees on your debit card's website for more information to make sure you won't incur any fees when withdrawing. You can also withdraw at a teller inside the bank. You cannot add funds to this card; only the state can do so.
You can also use the debit card to get gas in gas stations. One thing to note is that in most cases you will not be able to use the card at the pump itself. This is because when you use it at the pump, there is a hold placed on your card which most UI debit cards do not support. Instead, you can go inside and pay at the cashier.
Using the card online
The debit card can also be used online, for example for online shopping. You would be using the debit card just as you would use any credit card, by putting in the name, card number, address, expiration date, and security code. Since your card bears the Mastercard or Visa logo, you will be offered the same protections when using the card online, such as being able to dispute items not received or fraudulent transactions. You can also use the card to pay bills online, such as your phone bill, rent, utility bills, and any other providers that accept payment through credit or debit cards.
Transferring Funds to Personal Bank Account
If you want your money in your bank account, most of the debit cards allow you to transfer funds from the card to your personal account. A direct transfer from card to bank account can be set up through the debit card's portal. This lets you transfer some, if not all, of your benefits that are on the card, into your bank account. The transfer may take up to 48 hours to complete in some cases, and there sometimes is a limit on how much can be transferred in a single day or a single transaction.
The main advantage of the Debit Card over other methods of payment is that you will get the balance the fastest. Direct Deposit could take up to 48 hours or more depending on the bank, and checks take several days to be received. But funds transferred from the state onto the debit card often show up in less than 24 hours. Another advantage is that it is easy to keep track of receiving and spending the benefits through the card's online website or mobile app.
The main disadvantage is the fee schedule that comes with the card. While often there is no fee for withdrawing from an in-network ATM, there usually is a fee from withdrawing from ATMs that belong to different banks. Another disadvantage is that the card is susceptible to fraud such as being stolen or skimmed. While all cards offer fraud prevention, unauthorized use can cause a big inconvenience. The issuing banks have also been known to mistakenly lock the card for suspecting fraud, which requires to call them to have the card unlocked.
When you need customer support with the card, for example to replace a lost or stolen card, or help understanding a certain fee or transaction, you need to call the number on the back of the card rather than calling the state's unemployment office. For example, for prepaid cards issued in California, you would have to call Bank of America rather then calling the EDD.
In summary, your card works very similar to any other debit card, so don't be afraid to use it as such. We hope this guide helps you understand how a UI Pre-Paid Debit Card works. Note that some of the above might not apply to your credit card, so check the card's website for all terms and fees your debit card is subject to.