The state of Colorado has shortchanged some of its poorest citizens by making them pay ATM fees to access their benefits under programs such as food stamps, Temporary Assistance to Needy Families and old-age pensions.
As David Migoya reported in Wednesday’s Denver Post, poor Coloradans have paid some $1.8 million in fees over the last two years just for using their state-issued debit cards. Each use costs recipients 85 cents. Additionally, banks such as Wells Fargo & Co. and U.S. Bancorp charge an additional $2 when non-customers use their cash machines.
Nobody expects the banks to provide debit card services for free, but there are compelling reasons why the state, not individual clients, should pay the ATM charges. It’s not only wrong to put the burden of ATM fees on the poor, it’s also inefficient. That’s why 26 other states already pay for social services clients to make up to four free ATM transactions a month.
First of all, the debit card program clearly benefits the state by holding down the cost of paperwork and minimizing the misuse of benefits, such as reselling food stamps. The cost of the program could easily be covered from the state’s savings.
Second, the state – like any other bulk purchaser – can negotiate much lower prices from the banks than individual users are charged. A look at two states that do pay their clients fees proves the point.
Michigan, with a population of 10.1 million compared to Colorado’s 4.6 million, spent just $575,000 last year to cover ATM fees. On a per capita basis, the $900,000 paid by Colorado clients is four times as high. Likewise, California, population 36.1 million, spent $4 million to cover ATM fees – less than half Colorado’s per capita cost.
By using its bargaining power, Colorado can not only negotiate ATM fees, it can probably get banks to waive the extra charges for non-customers – since the state maintains sizeable deposits in most state banks.
Colorado should join the states picking up ATM fees for social services clients – if only because easing the burden on the poor also eases the burden on our taxpayers.
