Imagine you’re temporarily uprooted by a tornado, a fire or some other Midwestern equivalent of a Gulf Coast hurricane. For who knows how long, you’re bivouacked two states away. The home you’ve abandoned will be uninhabitable for weeks if not months, and your household mail is piling up unopened–somewhere. That mail includes the monthly benefit check on which you live.
This sort of dislocation happens so frequently, on a small scale, that it’s a wonder anyone still receives benefit payments, from a government agency or any other source, as a piece of paper delivered by a carrier. Yet the federal government mails out 160 million benefit checks every year, the majority of them to aging or disabled Social Security recipients who would be wiser to have that money electronically deposited at the financial institution of their choice. Why don’t they? Blame two of humankind’s most powerful forces: inertia and fear.
What makes this troubling is the vulnerability of those who haven’t switched to direct deposit. Receiving benefit checks exposes them to risks of losing those checks, of being burglarized, of having their identities stolen and of being robbed or carjacked traveling to and from wherever they cash their checks. Last year, half a million Americans called Social Security offices to report problems with checks. Hurricane Katrina has forced 50,000 people to seek emergency payments that would be unnecessary if they were receiving their Social Security money by direct deposit.
The reticence of some people to embrace the ease and safety of electronic payments may baffle the millions of Americans whose paychecks are, in fact, blips of data sent to their checking or savings accounts. But to other Americans, especially those who remember Depression-era bank failures, trust in even a low-risk, predictable and reliable system such as direct deposit comes hard. The growth of direct deposit for federal benefits has slowed to less than 1 percent per year. In Illinois alone, 430,000 people still receive federal benefits by check. This despite the fact that with direct deposit the money is available early on each month’s payment day.
This is where children, friends or neighbors could offer peace of mind to people who receive government or pension benefits by check. A gentle question from a trusted voice can help people learn how to add safety and simplicity to the income stream on which they depend. One point worth explaining: The feds calculate that a recipient is 30 times more likely to have a problem with a check than with a direct deposit payment.
The U.S. Treasury, which itself could save $120 million per year by switching everyone to paperless payments, is launching a campaign called “Go Direct” to teach benefit recipients the value of direct deposit. Volunteers at banks, senior centers and health and consumer groups will do much of the outreach. The change is simple to execute, the instructions strike us as clear and there are options for people who don’t have bank accounts. (For specifics, English speakers can call 800-333-1795 or visit www.GoDirect.org; the access points for Spanish speakers are 800-333-1792 and www.DirectoASuCuenta.org.)
As crises go, a monthly avalanche of paper benefit checks doesn’t rank with a tornado, a fire or a hurricane. Unless your check or your parents’ is among those that can’t be delivered.
Each of us able to read a printed page had, when we were young, someone to teach us the rudiments of handling money. Taking a moment to return the favor–to our parents or to someone else who receives a government pension or other check–is an easy way to express our thanks.
