- The Washington Times - Thursday, December 5, 2002

Get ready to add another piece of plastic to your wallet. Employers are signing up to offer their workers the Clear card, which allows employees to borrow money interest-free from future paychecks.
For example, if a worker uses the card to buy a $100 pair of shoes, his next four weekly paychecks will be $25 lighter. Using the Clear card instead of a credit card allows the worker to avoid interest payments and late fees.
Executives at E-Duction, a Blue Bell, Pa., company that created the card, were unavailable for comment. In published reports, executives said the card is useful in cash emergencies, but its real advantage is convenience.
"Now you just payroll-deduct and throw the bills away," Kirk Watkins, E-Duction's founder and chief executive, told the New York Times in September.
Twelve employers, including First Data Corp., the parent company of money-transfer powerhouse Western Union, offer the Clear card, according to reports. In all, 2,000 cards have been issued.
E-Duction is reportedly talking to another 150 to 200 companies with 4 million workers.
At least 10 percent of First Data's employees have signed up to use the Clear card.
"We feel we have a comprehensive benefits package, and this seemed like it would be a unique addition. The cost to us has been incremental," said Wendy Carver-Herbert, a First Data spokeswoman.
The company has not researched how its employees use the card. Mrs. Carver-Herbert said she knows at least one worker used it to buy a set of tires for her daughter's car.
"Essentially, it allowed her to buy all four tires at once, but pay for each tire one at a time," she said.
Payroll deduction is not a new idea. Many workers already have arrangements with their employers to deduct money each month for retirement plans, life insurance policies, transit vouchers and their children's education.
Some employers offer their workers flexible savings accounts, which also allow employees to set aside money from each paycheck.
The accounts have not caught on because employees are required to complete a lot of paperwork to access the money, according to David Albertson, editorial director of Employee Benefits News, a magazine for personnel directors.
"A product like the Clear card streamlines the flexible savings-account process. Employees can access the funds whenever they like," Mr. Albertson said.
Workers pay an annual $29 fee for a Clear card, which can be used at any of the 28 million merchants who accept MasterCard. The worker receives a spending limit of 2.5 percent of their salary if they earn $75,000 a year or less, and as much as 4 percent if they earn more, the reports said.
Any amount an employee borrows is automatically paid back over two months. For workers paid every two weeks or twice a month, each transaction will be paid off in four equal payments, the reports say.
According to the company's Web site, if a worker makes a purchase through one of E-Duction's "preferred merchants," payments can be spread over six months.
What happens if a worker charges a purchase but is fired or quits? The reports say the card's annual percentage rate will go from zero to 14.99 percent if a worker voluntarily closes the account, his minimum payment exceeds his net pay for all payments due in a month or he is no longer a full-time employee at the company or does not maintain a minimum $20,000 annual salary.
Some critics say the Clear card could be more trouble than its worth.
"I wouldn't call it the Clear Conscience card," said Steve Rhode, president and co-founder of MyVesta.org Inc., a credit-counseling center in Rockville.
Most consumers are "poor mental accountants," Mr. Rhode said, making it easy for them to use the Clear card to overspend.
E-Duction executives said the card could help consumers build good credit.
"It's not targeted at the disenfranchised," John Gregitis, the company's chief operating officer, told Investor's Business Daily in July. Clear card users have an average salary of $58,000, he said.
The Clear card is an example of the kind of voluntary benefits employers are increasingly offering.
In recent years, many companies have introduced long-term care insurance and 529 plans, which allow employees to save for their children's education via payroll deduction.
"So many employers have had to cut back on health benefits. Offering these voluntary benefits helps ease the pain," said Mr. Albertson of Employee Benefits News magazine.

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