Preloaded Cards for Families

Several programs in the United States load money onto a card every month for households under the income limit. Most people have heard of one of them and miss the rest.

The confusion starts with the word card. A benefits card is not a credit card, and no state agency hands out a line of credit. What does exist, and what millions of American households already use, is a card that is loaded with money you do not pay back. Below is what each of those programs is, who qualifies for it, and where the application actually happens.

What a preloaded benefits card actually is

Three different things get called by the same name. A credit card lets you borrow money and pay it back with interest. A prepaid debit card holds money that has already been loaded onto it, and there is nothing to repay. An EBT card, short for Electronic Benefit Transfer, is the prepaid card that states use to pay out federal and state benefits. When a program tells you that you will receive a card, it is almost always the third kind.

That distinction matters the moment you apply. EBT cards are issued by your state agency rather than by a bank, and they do not involve a credit check. Nobody pulls your score, and a thin credit file, an old collection or a past bankruptcy does not disqualify you from any of it.

SNAP puts food money on the card

SNAP, still widely called food stamps, is the largest of these programs by a wide margin. Benefits load onto an EBT card once a month on a schedule set by your state, and the card works at most grocery stores, at many corner stores and at a growing number of farmers markets. The money is restricted to food you prepare at home: groceries, and seeds or plants that produce food, but not hot prepared meals, alcohol, pet food or household supplies.

Eligibility is calculated from household size, income and, in some states, from assets. Because the limits are tied to the federal poverty guidelines, they are adjusted every year, which means a household that sat just over the line last year can be under it now. Applications go through the state agency in every case, never through a private website that charges a fee for the form.

TANF is the program that pays actual cash

Temporary Assistance for Needy Families is what people are describing when they talk about a card the state loads with cash. It is aimed at families with children, each state runs it under its own name and its own rules, and in most states the payment arrives on the same EBT card as SNAP or on a separate prepaid card issued by the state. The money can be withdrawn at an ATM or spent anywhere the card is accepted, and that is what separates it from SNAP.

What varies from one state to the next is almost everything else about it.

• Monthly amounts are set at state level, and the distance between the most and the least generous states is very large.
• Most states attach work requirements or a documented work-search plan once the children in the household reach a certain age.
• Federal rules put a lifetime limit on how many months an adult can receive TANF, and several states set a shorter limit than the federal one.
• A few states run a separate program for households with no children at all, usually called general assistance, with its own much tighter rules.

Guaranteed income pilots

Over the past few years dozens of American cities have run guaranteed income pilots that pay a fixed sum each month onto a prepaid debit card with no conditions attached to how it is spent. These are real programs, they have paid out to thousands of households, and they are the closest thing that exists to a no-strings preloaded card. They are also local rather than national, usually funded for a fixed number of months, and most of them select participants by lottery from a defined neighbourhood or group. If one is running where you live it is announced on the city website, and the application window tends to be short.

Public money that already arrives on a card

Even outside the programs built for low-income households, a great deal of public money in the United States is paid out on prepaid cards rather than by check. If you have received any of the following, you have already been issued one.

• Unemployment insurance, which many states load onto a state-issued prepaid debit card unless you set up direct deposit yourself.
• Tax refunds, which can be directed onto a prepaid card instead of into a bank account.
• WIC benefits for pregnant women, new mothers and young children, now issued on an EBT card in every state.
• Child support payments and some disability benefits, which several states pay out the same way.

If what you want is a real credit card

None of the programs above builds a credit history, for the simple reason that none of them is credit. If the goal is a card that reports to the bureaus, the usual route for a thin or damaged file is a secured card: you place a deposit, often a few hundred dollars, and that deposit becomes your spending limit. Payments are reported like those on any other card, and a number of issuers convert the account to a normal unsecured card after a run of on-time payments.

Credit-builder accounts at credit unions reach the same result from the other direction, by holding the money in a locked savings account while you make the payments. Both are commercial products rather than government programs. No agency will hand you one, and any site advertising a government credit card is describing something that does not exist.

What to have ready before you apply

• Proof of identity for every member of the household you are applying for.
• Income for the last month or two: pay stubs, a benefit award letter, or a written statement if you are paid in cash.
• Proof of address, such as a lease, a mortgage statement or a recent utility bill.
• Social Security numbers for the people applying, although a household can often apply on behalf of some members only.
• Rough figures for rent, utilities and childcare, because several programs deduct those costs before they test your income.

Where the application actually happens

Every one of these programs is applied for through a government office: the state agency for SNAP, TANF and unemployment, the city for a guaranteed income pilot, a local clinic for WIC. The federal benefit finder is the shortest way in. It asks a series of questions about your household and returns the programs you appear to qualify for, with a link through to the correct office in your state. It is free, it takes a few minutes, and no private company sits between you and the agency.