The Benefits of Payroll Debit Cards for Unbanked Employees

Today's tough economy has led to financial institutions raising their requirements for new clients and lowering the interest from poor credit consumers. Banks review checking and savings account applications based on credit, not just banking history. With the rising cost in bank fees, more unbanked and underbanked employees are avoiding banks and living on a cash-only basis. But how does an unbanked employee receive a paycheck?

More employers are turning to the use of payroll debit cards versus the traditional paper paycheck. Payroll debit cards are flexible, convenient, and the most cost-effective payment method in the long run for employers as well as employees.

Direct Deposit without a Bank
Unbanked employees or those who have been denied a checking account can enjoy the benefits of direct deposit while using payroll cards. Since payroll cards act like a reloadable debit card, employees can use their card to make direct purchases or withdrawals from their paycheck-without ever opening a bank account. The payroll debit card is set up through employers, which means employees do not have to worry about being denied due to poor credit.

Saving Time and Money for the Employee
Employees who do not have bank accounts spend countless hours visiting check cashing centers and waiting in line to cash their checks. Not only does this cost money by wasting time, but then the employee pays a check cashing fee anywhere from two to ten percent on the total cashed. If the employee had a bank account, he would have to worry about overdraft fees and fines associated with his bank account. Payroll debit cards, on the other hand, have no overdraft fees, no monthly fees, and no check cashing charges for the employee to worry about-which puts more money in his pocket each pay period.

Saving Time and Money for the Employer
Employers can take advantage of numerous benefits associated with payroll cards as well. One of the biggest advantages is that employers can avoid the hassles of creating and distributing traditional paper checks. Not only does this cost money in materials and resources, but it takes time to process the payroll checks. Companies looking to go green are opting for payroll debit cards versus issuing paychecks as well. Payroll debit cards are acceptable by all employees, regardless of their bank account status.

The biggest benefit of payroll debit cards is that employees have instant access to their money. They no longer have to wait the standard three to five business days for checks to clear, find a branch of a bank their employer banks with, or wait overnight for direct deposits to be processed. Instead, the money is available instantly. Employers consider this an advantage as well when it comes to balancing their ledger. Since paper checks take time to cash and display on the employer's account, his bank reconciliation can be off for days-if not weeks. With payroll cards, an employer's bank account is up-to-date and reflects the current funds for the company.

There really are no disadvantages to using a payroll debit card for employers and employees. Everyone saves time and money, and the convenience and flexibility of payroll debit cards can't be matched by the old way of paying employees.

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