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US urging switch to direct deposit benefits

The Treasury Department is facing a March 1 deadline to get millions of people who still receive benefit payments by mail to convert to electronic delivery.

Affected are those receiving Social Security, Supplemental Security Income, Veterans ­Affairs, Railroad Retirement Board or Office of Personnel Management benefits and other nontax federal payments. The government has been gradually phasing out paper checks to save money. It costs 92 cents more to issue a paper check than electronically depositing the benefit money.

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Two years ago, 11 million checks a month went out, according to Walt Henderson, director of the Treasury’s “Go Direct” campaign. The number has been reduced to 5 million.

You can sign up for direct deposit or the Direct Express debit MasterCard by calling 800-333-1795. You can also sign up online at www.godirect.org. With the debit card, you can make purchases, pay bills, and withdraw cash at ­ATMs. Starting in 2011, new applicants for federal benefits had to choose to get their money in one of these ways.

The debit cards are issued by Comerica Bank. There are no fees to sign up. There are also no monthly fees or overdraft charges.

When I first wrote about the Direct Express debit card, I was critical of one aspect that I still think needs to be changed. People using the card only get one free withdrawal per deposit of federal funds. And to get that withdrawal, you have to use specific ATMs in networks ­associated with the Treasury program. You can locate the nearest ATM where you won’t be charged for the first free withdrawal by going to www.usdirectexpress.com.

If you exceed the one withdrawal, it will cost 90 cents, and this does not include a surcharge that may be levied by the ATM owner. At the very least, people ought to be allowed up to three or four free ATM withdrawals a month.

Still, if you manage the debit card right, you can avoid fees. There is no fee for using a bank teller. You can use the card anywhere a debit MasterCard is accepted. Merchant purchases and cash back received during those transactions also come with no fee.

If you want a paper statement, it will cost you 75 cents a month. And if you want money transferred to a bank account, you’ll be charged $1.50.

Treasury will grant waivers from the electronic mandate for certain people. Automatic waivers are granted to people born on or before May 1, 1921. And you can ask for a waiver if you live in a remote area that does not support electronic payments.

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