A new contract between the Oregon State Treasury and U.S. Bank will eliminate many of the fees paid by Oregonians who receive unemployment or child support payments on the bank’s debit cards.

About half of the roughly 230,000 Oregonians receiving such payments have them deposited directly into a bank account, while the other half receives their payments on a ReliaCard issued by U.S. Bank. Under the current contract, adopted in 2009 and due to expire Dec. 31, ReliaCard holders have been subject to fees for excessive visits to U.S. Bank ATMs or branches, fees for use of ATMs outside of the U.S. Bank network and a $17 overdraft protection fee should they overdraw their accounts.

The new contract allows unlimited visits to U.S. Bank branches or ATMs, and up to two free withdrawals at ATMs outside the U.S. Bank network. A change in federal law eliminates overdraft protection on cards issued to provide state benefits.

James Sinks, spokesman for State Treasurer Ted Wheeler, said the overwhelming majority of transactions on ReliaCards have been at retail locations, where the cardholder can often receive cash back with their purchase. Such transactions always have been free for ReliaCard holders, he said, and will continue to be free when the new contract goes into effect Jan. 1.

The state pays nothing to U.S. Bank to administer the ReliaCard system, Sinks said. The elimination of paper checks in favor of a combination of direct deposit and the ReliaCard system saved the sate an estimated $11.5 million between 2007 and Dec. 2010.

Scott Cooper, executive director of Redmond-based Partnership to End Poverty, said while it’s hard to estimate how much money Oregonians receiving benefits on a ReliaCard paid in fees and penalties, he’s heard dozens of stories from people who’ve racked up charge after charge.

“You shouldn’t have to pay 17 bucks to buy a loaf of bread because you didn’t keep track of what was on your ReliaCard that day,” he said. “That’s a pretty expensive loaf of bread.”

Partnership to End Poverty is among the organizations that have worked with the Treasurer’s Office since it began renegotiating the contract with U.S. Bank last summer. Cooper said the continued weak economy and high unemployment numbers have pushed the issue into the spotlight for organizations like his.

“I don’t even know if this would have been that big an issue if it were not for the surge in the number of people relying on these cards since the advent of the recession,” Cooper said. “But there’s a lot more Oregonians who know what a ReliaCard is all about than there were four years ago.”