Terry Savage

Social Security Says Bye to Paper Checks -- But Do Not Fear
 Q: My elderly mother received a notice that she will no longer get a Social Security check, but that her monthly amount must be deposited into her bank account. She doesn't have a bank account, except the joint account I use to manage her expenses.

What's this all about?

A: This is all part of the Treasury Department's efforts to save money and make delivery of payments more secure. Starting May 1, all new applicants for government benefits such as Social Security, Veterans Affairs or other federal benefits must receive the money electronically.

People who currently receive federal benefits by paper check must switch to direct deposit by March 1, 2013. The move to do away with paper checks is expected to save $1 billion over the next 10 years, as baby boomers start receiving retirement benefits.

According to the Treasury Department, it costs 92 cents more to issue a paper check than to make an electronic deposit.

And think of all the trees we'll be saving!

Already, the great majority of the 80 million receiving federal benefits get them via direct deposit. But the change has certainly created anxiety for many of the 11 million senior citizens still receiving benefits by paper check.

If you know of someone in this position, please show him or her this column -- and help them make the switch, which is easily done following the instructions that come in the envelope with their check -- or by going online to www.GoDirect.org. There is also a helpline at (800) 333-1795.

Actually, there are two alternatives to receiving a paper check. The money can be directly deposited into a new or existing bank account, either checking or savings. It will arrive securely, and once deposited you can write checks or pay bills online from your account. To get the direct deposit started, you'll need the bank's "routing transit number," which is found on the face of the check, as well as the bank account number.

Or the money can be directly deposited onto a "DirectExpress" Debit MasterCard, created especially for this purpose. That card can be used at any merchant that accepts MasterCard, or at ATMs to withdraw cash. You get one free cash withdrawal every month, but you can also get cash back with purchases for no additional fee.

Terry Savage

Terry Savage is a nationally known expert on personal finance and a regular television commentator on CNN, CNBC, PBS, and NBC on issues related to investing and financial markets.

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