First, you lose your job and your paycheck.

   Then the unemployment benefits that are supposed to keep you afloat get chewed around the edges by bank fees.

   As Missouri’s unemployment rate rose to 6.4 percent last month, many newly jobless workers are facing that situation after the state began phasing in a new system of paying unemployment benefits through bank debit cards.

   Marie Williamson, who was laid off from the Chrysler truck plant in Fenton, said her bank told her she would be charged $2 to $3 to convert her debit card to cash. On top of that, the bank that issued the debit card – Central Bank in Jefferson City – would take another $1.75 unless she uses an automatic teller in Central Bank’s network.

   “But I live in Mineral Point just outside Potosi,” Williamson said. “MasterCard told me the nearest no-fee ATM is 33½ miles away. By the time I pay for gas to drive there and back, I might as well pay the fees.”

   Daisy Olivo, a spokeswoman for the state Labor Department, said the new program was an effort to improve customer service by providing a more convenient option for receiving benefits. State officials are still working through a few early glitches, but for the overwhelming majority of the 15,400 people in the new program, the process has gone off without a hitch, she said.

   “The program offers multiple ways to get money without fees,” Olivo said. “Tellers at any bank displaying the MasterCard logo – that’s roughly 3,000 banks in Missouri – will provide cash from the card without a fee. And the card can be used at any merchant that takes MasterCard – and the user can even get cash back.”

   Olivo said fewer than 2 percent of the debit card recipients had experienced problems gaining access to their funds. Central Bank won the contract, she said, largely because their bid included lower fees.

   But Rep. Rachel Storch, a St. Louis Democrat, said she had received numerous complaints about the fees involved in cashing benefits. The situation is particularly vexing, she said, given the looming layoff of 2,500 workers in St. Louis in October because of the impending shutdown of one Chrysler plant in St. Louis and the downsizing of another.

   “We seem to have a system that invites abusive and excessive fees,” Storch said. “At the same time we’re having these mass layoffs that have highlighted the problems. The workers here have a union with the ability to deal with the problem. But a lot of people out there are running into these kinds of problems, but don’t even know who to call.”

   The state began phasing in the use of debit cards on July 9. So far, every claim for unemployment benefits that is processed on Wednesday or Thursday receives the debit card, Olivo said. Claims processed other days still get either a check or direct deposit.

   The change is expected to save the state $650,000 a year, primarily in postage costs. Each week, recipients’ benefits are added to the their cards on the day their payment is due.

   Storch said she supported efforts to deliver benefits more efficiently. But people who have just lost jobs shouldn’t be penalized in the process, she said.

   “It’s not unreasonable for the bank to get a fee for providing a service to the state,” Storch said. “But that fee should come from the government contract, not from the pockets of unemployment recipients.”

   Under current regulations, new applicants for unemployment insurance can request direct deposit into their checking accounts. But they must make that request within seven days from the time of their initial claim for benefits. Storch said many people don’t notice that requirement amid all the paperwork involved in applying for benefits.

   In response to such complaints, Olivo said, the seven-day requirement has been waived. Workers can now change from a debit card to direct deposit at any time.

   But the system has sparked other complaints. Darin Gilley, president of United Auto Workers Local 1760 in Pacific, said some people received the debit card, but it wasn’t funded. Being out of work makes avoiding the fees even harder, he said.

   The debit card issuer charges 50 cents, for examples, to check the balance remaining on a card. It can be done free online, but many people can no longer afford internet service because they are out of work, Gilley said.  

   “The Labor Department says it costs $1.50 to send out a check,” he said. “One of my members said he’s rather just pay it upfront. Compared with $5 in fees, it starts looking pretty reasonable.”