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U.S. Treasury Phases Out Checks

Moving to electronic payments for government benefits is expected to save Social Security $1 billion.

The U.S. Department of the Treasury is officially moving from checks to electronic payments. The government agency has announced that anyone applying for federal benefits on or after May 1, 2011, will receive their payments electronically, while those already receiving paper checks will need to switch to direct deposit by March 1, 2013. The Treasury Department's Go Direct public education campaign will provide information to Americans about the change to how federal benefit payments are being delivered.

"Eight in 10 federal benefit recipients already use direct deposit, and now millions of additional retirees, veterans and other Americans will also receive their money in the safest, most reliable way – electronically," says Treasury Fiscal Assistant Secretary Richard L. Gregg. "This important change will provide significant savings to American taxpayers who will no longer incur the annual $120 million price tag associated with paper checks and will save Social Security $1 billion over the next 10 years."

After seeking public comment on the proposed rule issued in June 2010, federal regulations were changed to generally require all federal benefits including Social Security, Supplemental Security Income, Veterans Affairs, Railroad Retirement Board, Office of Personnel Management benefits and other non-tax payments to be made electronically. Benefit recipients have the option of direct deposit into a bank or credit union account of their choice or into a Direct Express Debit MasterCard card account. More than 1.5 million beneficiaries have signed up for the Direct Express card since it was introduced in 2008.

"I urge everyone receiving a paper Social Security or Supplemental Security Income check to switch to electronic payments now, through the Go Direct campaign, rather than waiting until the final deadline," says Michael J. Astrue, Commissioner of Social Security. "Switching now eliminates the risks of lost and stolen checks, and provides immediate access to your money on payment day."

Treasury is issuing a related rule to provide Americans receiving federal payments with more options for receiving their payments electronically while ensuring that appropriate consumer protections are provided and, in early 2011, Treasury will issue a rule to protect federal benefit payments from garnishment after they are directly deposited into accounts.

Benefit recipients who don't have a bank or credit union account are being encouraged to get a Direct Express card from Comerica Bank, Treasury's financial agent. The card lets cardholders make one free cash withdrawal with each deposit to the Direct Express card account. For cash withdrawals at ATMs outside the Direct Express ATM network, the ATM owner may charge a surcharge fee.

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