Illinois limits fees on payroll debit cards

Payroll cards are an alternative way to pay employees who do not have traditional banking services. Rather than issuing a paper check, employers provide employees with a payroll card that gets loaded with the employee’s wages every pay period. Payroll cards look and operate much like debit cards, and can be used to make withdrawals from an ATM or to make purchases at a store.

The law ensures that employees are not required to accept a payroll card and can choose another form of payment, such as a paper check or direct deposit. For employees who do accept a payroll card, the new law sets limits on fees and requires employers to clearly provide the terms of their payroll card program. The new law ensures employees can access their wages without incurring unreasonable fees. This includes a prohibition on fees for overdrafts, transaction history requests and purchases. The law also limits fees for declined transactions and card inactivity. More than 20 states already have similar protections in place. The law is effective January 1, 2015. (H.B. 5622, Laws 2014,, approved August 6, 2014, and effective as noted above; Illinois Government News Network, Governor’s Office Press Release, August 6, 2014; Illinois Attorney General Lisa Madigan, Press Release, August 6, 2014.)

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