NEW YORK (9/30/09)--Thirty-one states have issued prepaid debit cards to reduce their costs to print and mail unemployment checks. While this helps cash-strapped states save money, consumers may end up paying fees on their use (SmartMoney.com Sept. 4). Prepaid cards typically benefit the state, not the consumer. The state doesn’t pay a fee to the banks issuing the card, and can save millions on printing and postage. The banks get paid by the retailer when the consumer uses the card to make a purchase--in addition to any fees paid by the consumer. Federal rules allow at least one free ATM withdrawal per benefit payment, but you may get charged up to $1.50 per transaction after that. Some states charge for an automatic transfer to your bank account. If your transaction is declined because of nonsufficient funds, you also may be charged a fee. It’s typically free to check a balance online, but you may pay if you check it at an ATM. The best way to avoid misusing your unemployment earnings is to know what the rules and options are in your state. Direct deposit is usually a better option because of fewer or no fees. When filing for unemployment, be sure to ask about payment methods and get a copy of the fee schedule before you sign up for a prepaid debit card. For more information, see “Tough Times Series: Steps Before, During Layoff Make It Easier to Cope” in Home & Family Finance Resource Center.