Fed Regulators Pushing Direct Deposit
by Barbara Hurst, BOL GuruGuru Bios
After reviewing the results of a U.S. Treasury Department study on direct deposit, that agency and the Federal Reserve Board have launched a pilot program to market direct deposit to individuals that stand to benefit from its use.
The study found that while retirees and other individuals who receive regular government payments are significantly less likely to have a problem with direct deposit than with paper checks, the growth rate of direct deposit has fallen sharply. The study said the reasons for the decline include sentimental attachment to the old payment method, inertia and lack of motivation to set up direct deposit, an information gap in understanding direct deposit, and a mechanical gap caused by unasked individuals. Of those surveyed, 27 percent of Social Security and 68 percent of Supplemental Security Income check recipients did not have bank accounts.
The pilot program will target major metropolitan areas that have a high number of federal benefit check recipients. The "Go Direct" campaign will launch this fall and last for six months. It will focus heavily on grassroots outreaches to benefit recipients, largely through partnerships with community-based organizations and financial institutions.
Copyright © 2004 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 14, No. 07, 10/04
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