A growing number of employers use payroll cards to pay some of their employers, but it violates both state and federal law to pay by payroll card alone, according to Lauren Saunders, managing attorney with the National Consumer Law Center.
"Employees should always have the choice of direct deposit to their own bank account and also the choice of a check or cash," she said. "Depending on the particular card, for unbanked employees, a payroll card can be a safer, faster, more convenient and cheaper way of receiving wages than paying to cash a paper check. But payroll cards vary widely and some charge too many fees. Some payroll cards even have expensive overdraft fees, which are completely inappropriate on payroll cards or any other form of prepaid card."