How Bank of America makes money from unemployment benefits
So…the wife of someone from Hutch who had lost their job (layoff) and hasn’t yet found a new one sent me a message this week.
Her husband is receiving unemployment benefits, which are distributed on a Bank of America debit/credit card. But there are no Bank of America branches in Hutchinson, and no Bank of America ATM machines. That means for their family to access the benefits on the card locally, they could incur up to $6 in fees. She was clear that this wasn’t going to break the bank for them, and that their family could, if needed, handle the fees.
But, she said, what about other families that are worse off? Those families for whom $6 is a meal, or something else vital.
I became curious about how this arrangement came to be, how Bank of America profits from others’ misfortune, and why we handle such transactions in this way. My initial suspicion was that Bank of America made money from the fees, or that the state signed some contract to pay Bank of America a fee to process all state benefits. (I’m tired of typing Bank of America. It’s long and I don’t like that bank because, you know, 2007 and the whole let’s help kill the whole world’s economy thing. From now on I’ll call Bank of America “BofA”).
I decided to ask Legislative Research about it, because I knew they could get the answers for me. Seriously, the people there are awesome and incredible. I ask a question, they get an answer.
Turns out that my initial thought was wrong. BofA doesn’t make money from the fees. They make money from interest on the money the state gives them.
From legislative research: