Which States Gouge the Jobless (and How to Make Them Stop)

This story is an op/ed contribution to Credit.com and does not represent the views of the company or its affiliates.

NEW YORK (Credit.com) — Right now more than 5 million Americans get unemployment benefits. And right now, in many states a big chunk of those unemployment benefits are going straight to the bottom line profits of the nation's biggest banks because of junk fees tied to the prepaid cards used to distribute these funds.

While we can't take banks entirely out of the process, it's critical they get a smaller piece of the pie. We can certainly provide a more direct conduit from our tax dollars to get into the pockets of the unemployed without such a huge vig. It would be one thing if banks were mandated to use the profits from junk fees to hire more people, but they aren't. As much money as possible should go to regular people so they can spend it, putting the American economy back on track.

Most states now provide unemployment benefits to workers using prepaid debit cards. While some states are much worse than others, most states allow banks to load these cards with hidden junk fees, according to a recent study by the National Consumer Law Center. In California alone — one of the better states — unemployed workers lose $1.8 million every year on their state-issued prepaid debit cards. That's $1.8 million more in Bank of America's profit column, and $1.8 million less for families to cover necessities including rent, gasoline and food.

If you take a look at the way the following states allow unemployment benefits to be nickeled and dimed by megabank prepaid card programs, you will see why it's time to change the system:

Alaska: JPMorgan Chase charges $5 every time cardholders talk to a teller, $1.50 to withdraw money from an ATM more than once week and 35 cents just to call the automated customer service line. Chase even charges 40 cents to check the card balance from the bank's own ATM.