If you do not have a bank account, it is going to be hard to obtain a tax refund. This is because electronic banking and income tax filing are becoming so popular. The solution, says the Treasury Department, are tax refund debit cards. An income tax refund electronically transferred isn’t helpful for everyone without a bank account, which is also called “unbanked” or “underbanked”. Tax refund checks can take weeks to arrive. The without a bank will do something to acquire their money faster. Usually this means taking out “refund anticipation loans”. Also, taxpayers pay millions of dollars to the printing and mailing of these checks.
Tax refund debit cards accessible
Tax refund debit cards will make the process faster. The Associated Press reports that while direct deposits show up in financial institution accounts in eight to 15 days, tax refund checks can take six weeks to arrive within the mail. People without financial institution accounts are likely to borrow against their income tax refunds, paying steep fees for a return anticipation loan. Starting next year, a pilot tax refund debit card program can be offered to a number of hundred thousand taxpayers. The tax refund debit cards will work like checking accounts — without the checks or the bank. If the bank cards are lose or stolen, consumer protections stop purchases, and also the bank cards are insured just like bank deposits. The cards may also be able to store other income and contain bill-paying services.
Working class told to acquire a bank account
Income tax refund debit bank cards will benefit 26 million taxpayers. This figure comes from the Center for Economic Progress. The number was reached by working with the direct deposit refund from the 2010 tax season subtracted from the total tax refunds. That means 96.3 million minus 70.3 million was done. Automated Trader reports on the purpose of the program. Evidently the Obama administration wants more people to see how easy it is to have a bank account. ”Bank on USA” is a program where low-to-moderate income working class are encouraged to get into banking and got a $50 million request sent to Congress to the 2011 spending budget. An FDIC 2009 survey showed roughly 9 million households were without financial institution accounts.
Trying to stop refund anticipation loans
The Obama administration is intending to help those in risky financial situations find better way to work with finances with the income tax refund debit card initiative. The Wall Street Journal reports that one of the most recent policy change was announced last month. Banks use “debt indicators” to process refund anticipation loans, although now those will not be provided by the Internal Revenue Service anymore starting within the 2011 income tax season. Now banks are having a harder time making the short term installment loans that end up with annual percentage fees between 50 and 500 percent on them.
Additional reading
Associated Press
google.com/hostednews/ap/article/ALeqM5gjOACVZgIYIFoYxqpOl-uISuMxiAD9HVPC6G3
Automated Trader
automatedtrader.net/real-time-dow-jones/14805/-us-treasury-to-offer-low_cost-bank-accounts-for-tax-returns
