Get Your Tax Refund on Prepaid Debit Card!
Posted: April 13th, 2011 | Author: Joe | Filed under: Taxes | Tags: debit card, tax refund, Taxes | No Comments »How does this sound for convenience: The U. S. Treasury is offering the option for filers to get their refund on a prepaid debt card instead of traditional check or EFT (electronic funds transfer).
The option is only available to taxpayers who earn $35,000 a year or less, and it will be offered by a MyAccountCard Visa Prepaid Debit Card. Of course the government is talking about the cost savings associated with issuing the refund this way, though I’m not sure why. Does it really cost less to create a prepaid debit account and issuer a card than it does to transfer funds electronically?
To be fair, there is definitely a cost savings over mailing paper checks – 10 cents for prepaid debit card vs. $1 for paper check. But I’m far too cynical to think that’s their only reasoning.
They are only offering this option to taxpayers on the lower end of the economic scale. Is it just a coincidence that these are also the taxpayers who tend to have large refunds (and think it’s a good thing!) and who also view those refunds as “found money” to be spent of retail therapy by purchasing a large screen television or other such big-ticket items? Isn’t this just another form of stimulus – delivering fast, easy money to people who will likely spend it all (and probably increase their debt load in the process)?
And of course, there are fees associated with the card:
“The prepaid card is free for all customers, and the monthly service fee will range from being free to $4.95. All cards will offer unlimited free ATM withdrawals at 15,000 in-network ATMs, while a $2.50 service fee and a 50-cent balance inquiry charge will be incurred for using out-of-network ATMs.”
A much better use of a tax refund is paying down credit card debt, student loans, car loans – even an extra payment on your mortgage would be better. Also, contributing to or starting up a retirement savings plan or an emergency savings plan. I know, saving isn’t sexy. But you can do both.
My advice – treat this year’s refund as a windfall, and adjust your withholding to minimize your refund next year.
