Checks to vets and military households will generally end after March 1 under the government’s “Direct Express” program. Instead of paper checks and envelopes, the government is moving to electronic deposits, funds which go straight from the Treasury into beneficiary accounts.
The use of electronic transfers is ending an era. No longer will it be possible to say that a bill hasn’t been paid because the “check is in the mail.” Trips to the bank will decline, friendships with drive-in tellers will slow and we will lose the traditional values associated with checks – tangible pieces of paper that one can hold, fold and admire.
Under the program, recipients will have federal benefits deposited directly into bank, savings and loan or credit union accounts. Those without such accounts can have the money added to a “Direct Express” card, a prepaid debit card. The VA claims that “there is no credit check, no minimum balance required, and basic services are free” for the debit card.
The VA has been increasing the use of electronic deposits for several years but now wants to include just about all beneficiaries in the program.
The change-over began in 2010 as part of an effort to reduce $120 million in administrative costs. As VA Secretary Eric K. Shinseki explained, “receiving VA benefits electronically will increase the security, convenience and reliability of these vital payments.”
How To Use Overdraft Protection
For vets and military households the direct payment program creates a useful tool to maintain credit scores and conveniently make VA loan payments. Here’s how:
- Make sure electronic deposits are credited to your account on a specific date each month.
- Arrange to have your VA loan paid directly from your account several days after electronic deposits have been made. Speak with your lender for details and specifics.
- Get overdraft protection from your bank or credit union.
Overdraft protection is generally available at little cost, usually about $25 per year. The way it works is that overdraft money is used to pay checking accounts when they’re overdrawn up to a certain limit. It’s an instant loan – but it prevents over-draft charges, late payments and credit dings that can pile up when checking accounts are overdrawn even by a few dollars.
Checking account lines-of-credit must be repaid but the cost of repayment is generally cheap because the debt is only outstanding a few days.
Speak with your bank, savings and loan, or credit union for checking account details. Overdraft lines-of-credit are usually available without credit applications or much fuss, and lines of credit equal to one or more mortgage payments are usually available.
As for the Direct Express program, if you’re now getting paper checks you can find out more at the official website – GoDirect.org – or by calling (800) 333-1795.
Photo courtesy Hamed.Al-Raisi