If you are expecting tax refund but you do not have a bank account, now you have the option of loading your tax refunds on a reloadable prepaid debit card.
According to a recent study, there are many advantages of refunding your tax through these prepaid cards loading which include:
- Your money reaches you faster within 8-10 days
- The possibility of losing a check or a stolen check or a bounce check to IRS can be avoided
- You can also pass the check cashing fee which is almost 2-3 percent and can be more than $60 if your refund is $3000.
The customer advocates have advised these cardholders to shop a lot as these do provide a good alternative for Americans without a bank account but they can also charge lots of money if care is not taken in their use.
A lot of these cards don’t have upfront costs, but they have fees for using it with a PIN in a store or for withdrawing funds. You can even be charged for calling customer service,
says Michelle Jun, senior attorney for Consumers Union, the nonprofit publisher of Consumer Reports.
Before you choose a card, you need to really look to make sure it won’t sting you on the back end.
The big tax preparers like Turbo Tax, Jackson Hewitt and H&R Block provide their own versions of prepaid refund cards. Turbo Tax has provided this service for the second year in a row.
We had a lot of customers telling us they wanted to do direct deposit, but they didn’t have a bank account,
Gatlin said, who is a spokeswoman of the company. The other prepaid users also want to use this service as they want to keep a separate record of their taxes or do not want to share their bank account numbers online. Gatlin said.
You could split your refund and say, ‘I’m going to set aside X amount on a card for a plasma TV.’
H&R Block has been providing this service for 5 years and also provides an attraction to prepaid card users to get a free refund anticipation check if they refund on their Emerald card before Feb.
That could be especially appealing to those who want to pay their tax preparation fees out of their refund before they get their card,
says Chi Chi Wu, staff attorney at the National Consumer Law Center.