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FDIC Consumer News

Winter 2011/2012

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Direct Deposit Replacing Federal Benefit Checks

If you receive federal benefit payments such as Social Security or other government pensions — or you will soon — it’s time to stop looking forward to your check in the mail and start planning for direct deposit. That’s because the U.S. Department of the Treasury is phasing out paper checks for federal benefits in favor of all-electronic delivery via direct deposit by March 1, 2013.

The Treasury Department says the change will benefit consumers because electronic payments are safer, easier and more reliable than paper checks. In addition, those who use direct deposit can rest more easily knowing that their funds will appear in their bank account sooner than if they received a paper check.

What does this mean for you?

  • If you have not yet applied for federal benefits, when you do apply you must receive the funds electronically. That requirement began for new recipients on May 1, 2011.

  • If you already have your federal benefits direct-deposited into a bank account, the Treasury Department’s change will not affect you.

  • If you currently receive your benefits via paper check, you must switch to an electronic payment by March 1, 2013. To start, you need to provide the routing number for your bank (ask a customer service representative if you need to) and your account number. If you do not select an electronic payment option by March 1, 2013, you will receive your benefits on the Direct Express® card, a prepaid debit card that can be used to pay for purchases and access cash at ATMs.

If you don’t have a bank account and your funds are direct-deposited onto a prepaid card (also known as a stored value card) instead of a bank account, recognize that the card has potential benefits as well as potential costs and concerns, including the inability to build a relationship with a local financial institution that can be handy if you need other bank services. Now is a good time to look for a low- or no-cost checking or savings account. Also, some financial institutions will waive fees for customers who have regular direct deposits.

For tips on shopping for a bank account, see the Spring 2011 FDIC Consumer News (online at To learn more about the Direct Express® card and the new rules, call the Treasury Department’s toll-free helpline at 1-800-333-1795 or visit

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Last Updated 6/13/2014

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