WASHINGTON, April 26, 2011 /PRNewswire/ -- The U.S. Department of the Treasury is retiring the paper Social Security check for millions of baby boomers and others applying for federal benefits, a move that will save taxpayers $1 billion over the next 10 years. Beginning May 1, 2011, anyone newly applying for Social Security, Veterans Affairs or other federal benefits will need to choose an electronic payment method – paper checks will no longer be an option. People currently receiving their federal benefits by paper check must switch to direct deposit by March 1, 2013.
Treasurer of the United States Rosie Rios today highlighted the savings to taxpayers by ceremonially writing a check to American taxpayers in the amount of $1 billion. "More than 18 million baby boomers are expected to reach retirement age during the next five years, with 10,000 people a day becoming eligible for Social Security benefits," said Treasurer Rios. "It costs 92 cents more to issue a payment by paper check than by direct deposit. We are retiring the Social Security paper check option in favor of electronic payments because it is the right thing to do for benefit recipients and American taxpayers alike."
The Treasury Department published a final rule in December 2010, to gradually eliminate paper checks for federal benefit payments. In addition to the taxpayer savings, electronic payments are safer and more convenient than paper checks. Last year alone, more than 540,000 Social Security and Supplemental Security Income (SSI) paper checks were reported lost or stolen and had to be replaced.
Historic move away from checks
On January 31, 1940, Ida Mae Fuller received the first monthly Social Security benefit check and, to date, about 165 million people have received Social Security benefits. The movement toward electronic payments has been steadily increasing. According to the 2010 Federal Reserve Payments Study, electronic payments now make up over three-quarters of all noncash payments nationwide. There were 5.7 billion fewer checks written in 2009 than in 2006, a decline of 6.1 percent per year – while electronic payments grew 9.3 percent during that same period. Among federal benefit recipients, approximately eight in 10 receive their Social Security or other federal benefit payment electronically.
Timeline for phasing out paper checks
The Treasury Department's Go Direct® public education campaign provides information to Americans about the change to how federal benefit payments are being delivered and makes it easy for current check recipients to switch online at www.GoDirect.org or by calling a toll-free helpline.
May 1, 2011: People newly applying for federal benefits on or after May 1, 2011, must choose an electronic payment option at the time they sign up for their benefits. If they wish to direct their money into a bank or credit union account, they will want to have the following information on hand at the time they apply for their benefits:
People who prefer receiving their payments on a prepaid debit card or who do not have an account at a financial institution can receive a Direct Express Debit MasterCard card. For more information, visit www.GoDirect.org.
March 1, 2013: Current check recipients must switch to electronic payments before March 1, 2013. Switching from checks to direct deposit is fast, easy and free at www.GoDirect.org, by calling the U.S. Treasury Electronic Payment Solution Center's toll-free helpline at 1-800-333-1795, or by speaking with a bank or credit union representative.
Anyone already receiving federal benefit payments electronically will continue to receive their money as usual on their payment day. No action is required.
Downloadable B-roll will be available later today at www.newsinfusion.com/events/RetiretheCheck.
Historic photos, graphic elements, key numbers and additional information are available for download: www.GoDirect.org/media/retire-the-check.
The Go Direct® campaign is sponsored by the U.S. Department of the Treasury and the Federal Reserve Banks. The Direct Express® logo, Go Direct® and Direct Express® are registered service marks, and the Go Direct(SM) logo is a service mark, of the U.S. Department of the Treasury, Financial Management Service. The Direct Express® Debit MasterCard® card is issued by Comerica Bank, pursuant to a license by MasterCard International Incorporated. MasterCard® and the MasterCard® Brand Mark are registered trademarks of MasterCard International Incorporated.
SOURCE U.S. Department of the Treasury