Should I Receive a Tax Refund on a Prepaid Debit Card?
Earlier this week, we looked at whether it would ever be a good idea to get your tax refund in the form of an Amazon Gift Card (my verdict, as far as it costs at all , is no ).
But what if your tax inspector offers to get your prepaid debit card tax refund? Is this a smart move?
Many major tax preparation companies, including H&R Block, TaxAct, and TurboTax, provide you with the option to get a tax refund on your prepaid debit card. These cards are a little more flexible than the Amazon gift card option in the sense that you can spend your tax refund somewhere that accepts debit, but you are still locked out of tax refund expenses .
However, there are several benefits to receiving a refund from a prepaid debit card. If you need to get your money back as soon as possible, it often arrives faster through the tax inspector’s co-branded debit card; they usually give you money as soon as the IRS approves your return, so you don’t have to wait for the feds to mail the check or transfer the check directly. Some tax fillers offer bonuses if people choose to get their money back on debit cards, so if every dollar counts, you can get some extra by agreeing to transfer their refund to a debit card.
Plus, as NerdWallet reminds us, prepaid debit cards can be good financial tools for people who don’t have checking or savings accounts:
If you don’t have or can’t get a bank account, a prepaid debit card is a good option. For a fee, you can easily access your funds without having to worry about finding a place to cash out a large tax refund.
This “paid” thing is the biggest disadvantage of uploading your tax refund to a prepaid debit; Most of these cards have an ATM fee (which applies either to all ATMs or only out-of-network ATMs, depending on the card), and some cards have an additional charge.
For example, the H&R Block Emerald Card charges $ 0.95 per transaction if you use your Emerald Card to pay bills through the H&R Block bill payment service, and fees go up if you require an expedited bill payment. If you wish to top up your Emerald Card in cash, “a fee of up to $ 4.95 may apply.” The American Express Serve Free Reloads card that TaxAct offers allows you to do as many free reloads as you want, but charges a monthly fee of $ 6.95 (unless you live in Texas, New York, or Vermont).
So should I get a refund on a prepaid debit card? I tend to deny if you don’t need cash right away or don’t have a bank account, but I’m curious about your experience with prepaid tax debit refunds and if you would recommend them.