Prepaid Debit Card Reviews, Complaints, Etc

Tag: cards for tax refunds

Tax refund cards are used to help speed up the process of collecting tax refunds. Instead of having to wait weeks for a check to arrive, a tax refund card can offer immediate access to your refund dollars.

  • Should You Put Your Tax Refund On A Prepaid Card?

    Should You Put Your Tax Refund On A Prepaid Card?

    By Curtis Arnold and Lucy Lazarony

    All the major tax preparation companies give you this option, but does it make financial sense?  Here’s a look at the pros and cons of receiving a tax refund via prepaid cards with direct deposit.

    Fast access to your tax refund. Need a faster tax refund?  E-filing your return and requesting a tax refund be sent to a prepaid card with direct deposit or a bank account is the fastest way to go, according to the IRS website. The IRS is issuing refunds to taxpayers in as few as 10 days for those who e-file and opt to receive their tax refund by direct deposit.

    “Direct deposit is typically better,” says David Newville, senior policy analyst at the Center for Financial Services Innovation. “You’re going to get it quicker and it’s going to be more secure than a check.”

    Pocket that tax refund, pronto! (Photo credit: Tax Credits)

    Keep tax refund money separate from other accounts. Have a special project in mind for that tax refund but worried the money will disappear quickly amid your day-to-day spending? Putting a tax refund on a prepaid card will keep the money separate from your other accounts.

    “You might not want to dump it into a bank account because it might get lost in day-to-day charges,” says Ben Jackson, a senior analyst at the Mercator Advisory Group.

    Watch out for fees. The biggest downside to receiving your express tax refund on a prepaid card is the assortment of fees associated with prepaid cards.

    Joe Ridout, a spokesman for Consumer Action, a San Francisco-based consumer advocacy group, sees no advantage to receiving a tax refund on a prepaid card, especially for people with bank accounts who could simply opt to receive a direct deposit of their tax refund into a checking or savings account.

    “If you have a bank account, there’s no advantage whatsoever to getting your tax refund on a prepaid card,” Ridout says. “You needlessly would forfeit some of your tax refund with the fees that come with these cards.”

    Ridout added that prepaid cards may be appealing to consumers without bank accounts but the fees associated with prepaid cards can make them a costly choice. “The best money saving solution for consumers is to open a bank account,” Ridout says. “Because these cards are a solution that will cost you money.”

    Still, opening a bank account may simply not be possible for some people. And while it is certainly true that far too many prepaid cards charge fees that don’t make a speedy refund a wise choice, there are some exceptions. Shane Tripcony, of BestPrepaidDebitCards.com commented, “Typically, bank accounts such as free checking accounts are cheaper to operate, but for some people, the built-in limitations such as no overdraft fees make prepaid debit cards a viable alternative.  As fewer banks are offering free checking accounts, the prepaid card option becomes a good choice, despite differences in fees.  It is all in how you will use the account.”

    In fact, if you are considering a prepaid card for your tax refund, here are some low-fee options that will take the smallest bite out of your money.

    Serve from American Express . There simply aren’t many fees associated with Serve, American Express’s consumer-friendly prepaid debit card. There’s no activation fee, it’s easy to dodge the $1 monthly account charge and, importantly, cash withdrawals from MoneyPass ATMs are also free. It’s easy to get your federal tax refund sent quickly to your Serve account and, yes, there’s no charge.

    U.S. Bank Convenient Cash Card. Another good option, particularly if you live in an area with plenty of U.S. Bank ATMs, is the U.S. Bank Convenient Cash Card. Like most prepaid debit cards, it’s a snap to get your tax refund loaded for free onto a U.S. Bank Cash Card. But what sets it apart from other options is that cash withdrawals from U.S. Bank ATMs are free, as are direct deposit and bill pay.

    Chase Liquid. With 5,500 Chase branches nationwide, it’s easy to withdraw the tax refund you get loaded onto the Chase Liquid prepaid card without incurring an unwanted ATM charge. For a $4.95 monthly account charge, Chase Liquid makes it simple to avoid a long list of other fees as well.  It makes the card a worthy option for receiving a quick, relatively fee-free tax refund.

    But remember, because fees on prepaid cards vary so widely, it’s important to study the terms and conditions on prepaid cards carefully before signing up for one.

  • Tax Refund Cards

    Tax Refund Cards

    Try this as an exercise sometime. If you owe money to the Internal Revenue Service (IRS) or pay quarterly taxes, log onto your bank account to see just how quickly the check you send them gets deposited. It’s fast, very fast. And to be fair, the IRS is pretty speedy itself when it comes to issuing tax refunds.

    But just how fast the IRS gets that cash back to people depends on a few factors, including whether or not a return was filed electronically and whether a taxpayer has a bank account. In the case of people who have an account and opt to have their refund directly deposited, the wait can be as little as 10 days. For those lacking a bank account, though, the delay can be much longer, though the IRS says that it expects over 90 percent of refunds to be issued in less than 21 days this year. Still, if someone chooses to have the IRS mail them a check, the wait is longer to actually receive the refund and often includes a 5-day waiting period for the check to clear their banks. Additionally, if a refund check is lost, stolen or returned to the IRS as undeliverable, a replacement check cannot be mailed until 28 days after the original check was mailed.

    For those without bank accounts who want to receive their money ASAP – which is probably everyone, especially given that the average refund over the past few years has been about $3,000 – a prepaid debit card can help. Almost any prepaid debit card can be used to receive your tax refund via direct deposit. Some states, such as New York, also permit their tax refunds to be sent to prepaid debit cards as well. Some taxpayers may benefit from having their refund go to a prepaid card even if they do have a bank account; it can mean that a few thousand dollars doesn’t get lumped in with their regular spending rather than safeguarded for a specific project or purchase.

    Tax preparation companies like H&R Block understand the need some people have to get their refunds quickly and offer prepaid cards of their own. But as with any prepaid debit card, those used to receive tax refunds charge a variety of fees, including for withdrawing money and other activities. Indeed, H&R Block’s Emerald $2.50 to withdraw cash from an ATM and levies an additional $2.50 if an account is inactive for 3 months. Weighing whether the fees are worth the quick refund is an important part of deciding if a prepaid debit card is the right choice.

     

Prepaid Debit Card Reviews, Complaints, Etc