Transferring money from taxpayers to financial institutions is not going to nudge the poor to make better decisions, it's just going to make them poorer and banks richer.
The Washington Post reported that the Kansas legislature placed a daily cap of $25 on cash withdrawals for welfare recipients beginning July 1. This will force beneficiaries to make more frequent trips to the ATM to withdraw money from the debit cards used to pay public assistance benefits.
Since most ATMs are stocked with only $20 bills, this $25 limit is effectively a $20 limit.
This could prove to be a real burden for those who might not have a car or who might not live in a neighborhood where ATMs are easy to come by. Also, since there's a fee for every withdrawal, that means less money to those who need it, and more money to the financial institutions. Essentially, banks will be receiving a daily stipend of welfare money as of July 1.
In Kansas's financial system, every withdrawal incurs a $1 fee, and if the person using the ATM doesn't have a bank account, they will have to pay the ATM fee, too -- which could be $1 to $3, maybe more, depending on the bank.
Also, the welfare card issued by the state of Kansas isn't like a debit card from an ordinary bank. Ordinary debit cards allow their holders to make purchases for free in stores. In Kansas, beneficiaries get two free purchases a month. After that, they pay 40 cents every time they use the card to buy something -- anything.
So banks receive even more welfare money every time these folks purchase food, medicine, you name it.
Bank fees add up for people who are already financially constrained, so just imagine how much this new law will impact those on welfare.
The Washington Post reports: "One way around the fees might be to buy money orders. Postal money orders for amounts up to $500 are available for a $1.25 fee, although beneficiaries in Kansas might have to pay an additional fee if they use their card to buy the order."
I'm sure Kansas residents are glad to see their tax dollars at work, helping those financial institutions make ends meet. Brings a whole new meaning to corporate welfare.
The views and opinions expressed herein are those of the authors alone and do not necessarily reflect the views of Ora Media, LLC its affiliates, or its employees.
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