Payroll card popularity on the rise

Many larger retailers and various public and private employers across the United States have been issuing payroll debit cards, or pay cards, to their employees rather than paper checks.

According to the American Payroll Association, pay cards operate much like a bank-affiliated debit card, complete with a PIN number. Employees may use pay cards for ATM cash withdrawals, point-of-sale (POS) purchases and online purchases. There is no need to cash a paycheck and users have immediate access to funds directly deposited on the card.

Payroll cards may be most beneficial for workers who do not have a regular bank-affiliated checking account or those who must pay high check cashing fees.

Drawbacks, depending on employer and pay card vendor, may include fees and conditions to withdraw money. Also, some employees may find it more difficult to track their expenditures and budget their money if it goes directly onto a pay card.