From the perspective of corrections departments and of prisoners, providing cash at the moment of re-entry poses a number of problems.
For a few, those fees are probably nothing more than a short-term inconvenience. But that is the exception to the rule. Given that prison jobs often pay less than $1 per hour, it can be very difficult to build up savings. Of course, post-incarceration poverty might be common but it isn't a certainty. A staff psychiatrist working of a federal prison told me that some people leave prison with thousands of dollars. "If they've been on work release for years," he said, "they can end up with a lot of money, even ten thousand dollars."
But even if everyone leaving prison has a healthy balance sheet, former prisoners are the same as you in me when it comes to thrift. Every dollar matters. There's also a positive externality here. Don't we want people to have a bit of a cushion when they leave the gates?
Finding a solution from the market is difficult. Issuers working in this space may have trouble generating profit. Serving this population certainly requires higher-than-normal compliance efforts. As well, the lifetime spend on a release card is probably low. Even if a person re-enters with thousands of dollars, it may be some time before he or she facilitates a direct deposit from a job on to the card.
The status quo is that most prisoners re-enter society with a costly payment instrument. Perhaps because prisoners have no role in card selection, many of the prepaid cards given to people at the moment of release come with high fees. It turns out that fees can vary quite a lot.
Show me the Cards!
I found examples of cards from four different companies that compete in this space:
- The JPay Card is issued by Sunrise Bank, an OCC-regulated institution in Minneapolis, Minnesota.
- The Release Pay Card is issued by Cache Valley Bank, an FDIC-regulated bank from Logan, Utah.
- The EZCard, formerly issued by First California Bank. First California was recently acquired by Pacific Western Bank. As Pacific Western declined to become a prepaid issuer, they are no longer involved with this card. But I can't say who replaced them, because I cannot determine who issues their card now.
- Keefe Commissary Network's Access Freedom; also issued by Cache Valley Bank.
The JPay Card has been around for ten years. According to the company, JPay cards are currently in use in sixteen states. It costs 50 cents per month to have a JPay Card. Other fees:
- Replacement: $5
- Cancellation: $9.95
- Point of sale purchase: 70 cents
- Declined at POS: 50 cents
- ATM withdrawal: $2
- Live agent: $1
Note: According to their spokesperson, those are prices for prisoners of North Carolina facilities. The prices could be different elsewhere.
The cards issued by Cache Valley cost the most. Both cards impose a $2.50 weekly maintenance fee. I have never seen a weekly maintenance fee. Other fees listed on their disclosure agreement include:
- $1.50 ATM balance inquiry fee
- $2.95 domestic ATM fee
- $2.95 ATM decline fee
- $25.00 insufficient funds fee for denied ACH transactions
- $25.00 to close an account and receive a paper check for the remaining balance of funds.
To its credit, though, the Release Card doesn't impose transaction fees and it allows free cash back at the point-of-sale.
The EZCard Exit Card falls somewhere in the middle of the spectrum. Certainly, it is much more affordable that the Release Card. It charges a monthly maintenance fee of only $4.95. It costs $2.99 to withdraw from an ATM. But save for an initial free transaction, the card assesses a 99 cent fee per debit purchase. Getting a paper statement is another drawback. This is a service that might be very popular with the recently released, but with the EZCard, that is a costly opportunity. According to their terms and conditions, a paper statement costs $4.00. Probably the best thing about the EZCard is that it costs nothing to close an account.
I also found a government card. U.S. Debit, issued by JPMorgan Chase Bank, is utilized by a wide variety of federal agencies. The Bureau of the Fiscal Service reports that 92,343 prisoners received one of them in 2013. Is the Chase product a superior service? The fees:
- ATM withdrawal: $2
- ATM Inquiry: $0.45
- POS transaction: free
- Declined POS: $0.25
- Card replacement: $7.50 (plus $24.50 for rush delivery)
- No monthly maintenace fee.
In a class with no outstanding students, the US Debit is the best card.