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. Those without bank accounts may feel forced into borrowing. A refund anticipation loan then comes with steep fees. Several hundred thousand working class can be able to acquire a debit card with the pilot income tax refund program beginning next year. Without a check or bank, the tax refund debit bank cards work like checking accounts. The cards could be insured like financial institution deposits and will contain consumer protections from unauthorized purchases if they’re lost or stolen. Other income could be stored on these cards. That means bill-paying services will be available also.
Working class told to acquire a bank account
26 million working class people, as outlined by the Center for Economic Progress, might benefit from tax return debit . 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 that the Obama administration is exploring methods to encourage more people to obtain bank accounts. Congress received a $50 million request to fund a program called “Bank on USA.” This is to help low-to-moderate income working class work with states in getting into banking. About 9 million households have bank accounts, as shown in a FDIC 2009 survey.
Stopping refund anticipation loans from happening
The Obama administration is attempting to help those in risky financial situations find better way to work with finances with the tax return debit card initiative. The Wall Street Journal explains that policy is already changing. One of the most recent change was announced just a month ago. beginning within the 2011 income tax season, the Internal Revenue Service will no longer provide tax return businesses with “debt indicators” used by banks to process return anticipation loans. Banks will have a more difficult time making short term loans. The loans typically would have between 50 percent and 500 percent for the annual percentage fees.
Associated Press
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Automated Trader
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