What Is Direct Express? How Does It Compare to a Bank or Credit Card?

What if there were an easy, convenient, and seamless way to receive and spend your federal benefits — even without a bank account?

Many federal benefits recipients think their only option is to receive funding via direct deposit. Fortunately, there is another way: receiving your money onto a Direct Express card.

Are you asking, “what is Direct Express?” Our guide will help you learn more about Direct Express and how it is different from a bank or credit card. Keep reading to learn everything you need to know!

What Is Direct Express?

In a moment, we will explore the different benefits and drawbacks of using Direct Express. First, though, we need to answer a basic question: what is Direct Express?

Direct Express is a prepaid debit card that you can get if you receive federal benefits such as Social Security, SSI, and Veterans’ benefits. Instead of getting your money as a direct deposit, you can get the money entirely through this card.

In most respects, this card will function exactly like a debit or credit card when it comes to spending your money. With that being said, you will want to be aware of some key differences between Direct Express and debit and credit cards.

Direct Express vs. Credit and Debit Cards

Direct Express looks like a credit or debit card, and it functions much the same way when you need to spend money. However, there are several major differences between these types of cards.

Unlike a credit card, you are not actually borrowing money. You don’t have to worry about paying off a balance, taking on debt, getting charged interest, or spending more money than you actually have. Instead, the amount of funds you have available is limited by the federal benefits you receive.

Unlike a debit card, you cannot manually add money to a Direct Express card. You are limited by the benefits you receive each month. However, nothing keeps you from using both a debit and a Direct Express card and a traditional debit card so long as you don’t get the two of them confused.

These are some of the primary differences between these types of cards.  It’s important to understand some of the other similarities and differences between them before deciding whether Direct Express is right for you.

The Right ATMs

A Direct Express card is designed for you to spend the money directly as if you were using a debit card. However, there are times that you might need to get cash instead. When this happens, there are a few things you should know about, including the role of ATMs.

As with debit cards and credit cards, you can use ATMs to get cash from your card. So long as you use an ATM that is part of the Direct Express network, you can get one cash withdrawal per month for free. Any additional withdrawals from such an ATM will result in a charge of 90 cents.

Now, all of this is assuming you are using ATMs that are “in-network.” ATMs that are outside of that network may charge additional fees. Because of this, you should be wary of using ATMs with your Direct Express card if you travel abroad.

What if there aren’t any Direct Express network ATMs nearby? In that case, you can get cashback off of purchases from a retailer such as Wal-Mart. While you will be assessed 90 cents for this transaction, you will not need to pay any additional fees.

Liability Issues

In most respects, a Direct Express card is superior to a credit card. One area in which Direct Express cards are worse, though, is when it comes to liability coverage.

With a credit card, you don’t really have to worry about fraud. If your card is stolen and you report it, you are not liable for any fraudulent charges regardless of when you file a report.

A Direct Express card is very different. You will not be liable for any fraudulent charges so long as you report the card within a day of it going missing.

However, if you report the card missing or stolen within two to 90 days, you may be liable for up to $500 of the fraudulent charges. If you report the card past 90 days, you may be eligible for all of the charges.

Long story short? Ensure you keep track of your card and report right away if it is stolen or goes missing.

Direct Express and Your Credit Score

As we noted, you are likely to use your Direct Express card in addition to other cards like debit or credit cards. Because of this, you may be wondering: what effect does Direct Express have on your credit score?

Fortunately, this card has no impact on your credit score whatsoever. Not only will your behavior with this card not hurt (or help) your credit score, but you don’t have to worry about meeting a minimum credit rating to qualify.

Who Is Eligible for Direct Express

At this point, you may be interested in getting a Direct Express card. That brings us to our next question: who is actually eligible for this card?

The short answer is that anyone who qualifies for federal benefits can receive those benefits in a Direct Express card. Beyond that, there are no other eligibility requirements you need to worry about.

Once you have the card, you cannot borrow against future funds, so you must still wisely budget from month to month. A Direct Express card gives you an easier and more convenient way to spend those funds. 

Getting a Direct Express Card

Now you know whether you are eligible for a Direct Express card or not. If you are eligible, do you know how to get the card?

Signing up for the card is very easy. All you have to do is pick up the phone. You can call the Direct Express card enrollment center at (800) 333-1795 as soon as you qualify for benefits. You may also be given opportunity to sign up for Direct Express as part of your benefit application.

Account Balance and Fees

You can only spend the amount of money you have on the Direct Express card each month, so it’s important to know how to check your balance on a Direct Express card.

The easiest way to check your balance is by visiting the Direct Express website. There is also a smartphone app to help you keep track of your funds.

It’s possible to check your available funds through an ATM as well. If you want a simpler way to check your available balance, you can always call the number on the back of your card.

Now that we have reviewed key details about the Direct Express card, let’s look at the pros and cons to see if such a card is right.

The Benefits of Direct Express

One of the primary benefits of Direct Express is the sheer convenience of using it. Not only are the funds deposited onto your card each month, but using the card is just as easy as using a debit or credit card.

You can also use the card anywhere that accepts Mastercard. This means you don’t have to worry about whether the place you are shopping is likely to take your card.

Finally, the Direct Express card has limited fees, and the fees they do have are pretty modest. It’s entirely possible to go an entire year of using this card without paying a single fee, which is great for anyone on a limited income.

The Drawbacks of Direct Express

While there are a few drawbacks to the Direct Express card, most of them are pretty straightforward. For example, you cannot load additional money onto this card beyond your federal benefits deposits, so you will likely still need to carry multiple cards around.

While the fees are limited, those fees really stack up if you are using out-of-network ATMs. And if you travel internationally and try to get cash back from the card, you will pay a $3 charge and a fee for 3% of the amount withdrawn.

Domestically, you only get one free cash withdrawal per month. This is a non-issue if you prefer to pay most things by card, but those who prefer to pay cash and make multiple withdrawals will encounter multiple fees.

What’s Next?

If you were asking “What is Direct Express?” you have an answer. In addition to discovering the answers of today, it’s important to find solutions for tomorrow’s problems.

For example, most who receive federal benefits are on a limited income. That means it’s important to make every dollar count.

If this article about Direct Express is helpful to you, you may qualify for free wireless service through the Lifeline program. To check your eligibility for this program, click here.