In 2010 the Internal Revenue Service began a project testing the viability of paying tax
returns via prepaid debit cards. The Social Security Administration has had a prepaid
debit card option for years so it was only a matter of time before the U.S Treasury
checked out the option. The question is, is this a good option for tax payers?
The answer to the question is clearly no, it is not a good option. Prepaid debit cards are
loaded with fees, which is even more maddening considering the money loaded on the
card is your money. Paying a fee to have access to a large line of credit from a bank or
credit card issuer is understandable if not acceptable. But, paying for access to your own
money doesn’t come across as well.
Of course, the banks who issue the cards make big bucks in fees so they’re very
supportive of the option. And, they’re lining up to be the official prepaid debit card
provider to any state that chooses the prepaid debit card option for state tax refunds.
The good news is that the consumer can avoid having their return chewed up in prepaid
debit card fees for opting for two other methods of delivery; paper check or direct
deposit. Of course, to fully benefit from these option you have to have a bank account.
No bank account means no destination for direct deposit. And, no bank account also
means you’re destination is going to be a check cashing establishment.
There’s a silver lining even with the check cashing option. Check cashing stores chargea fee to cash your check. That fee is usually a few bucks for a smaller check amount.
But, the fee can get as high as 4% of larger amounts. Still, at the very least the amount
is predictable and it’s a one-time fee. You can’t make the same statement about prepaid debit card fees.
Michael B. Citron is an internationally known public speaker and author. He lectures for professional associations worldwide. Michael is a serial entrepreneur who is dedicated to living the American dream, and helping others to do the same. His role at DisputeSuite.com has placed him in the spotlight of the credit repair industry. DisputeSuite is the largest provider of technology and education services to the industry, and has been a catalyst in the forward movement to standardize the credit repair industry.