IRS to put refunds on debit cards
The agency prefers direct deposit, but it will offer debit cards to taxpayers without bank accounts.
This article is from The Associated Press.
The Treasury Department is offering to put tax refunds on prepaid debit cards for low-income taxpayers who don't have bank accounts.
The department announced Thursday that it will send letters to 600,000 households next week, offering to put their tax refunds on the debit cards, which can be used to get money from ATM machines or to buy goods and services from retailers.
The Internal Revenue Service encourages taxpayers to have their tax refunds deposited directly into bank accounts. For those without bank accounts, the debit cards will allow them to avoid check-cashing fees.
Deputy Treasury Secretary Neal Wolin said taxpayers can get refunds faster with the debit cards than with checks.
"This innovative card can be used for everyday financial transactions, such as receiving wages by direct deposit, withdrawing cash, making purchases, paying bills and building savings safely and conveniently, giving users more control over their financial futures," Wolin said.
Cardholders won't have to pay service fees if they use the cards to withdraw money from ATMs in the MoneyPass network. They will have to pay regular service fees if they use ATMs outside the network.
The program will also be open to workers who get paid by their employers using payroll cards, which are similar to prepaid debit cards. The Treasury Department said more than 1.7 million U.S. workers receive their wages on payroll cards.
Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
More from MSN Money:
By issuing the Debit Cards, the Fed is putting the burden of purchasing us out of debt onto the shoulders of the people least able to afford it. Shame on them.
People, put your money into the bank and save it for an emergency. That way you won't have to borrow more if you do have an emergency. The biggest problem with this country is the spending spree we've been on for the past 20 years. Time to start saving and getting along with less junk.
I have questions about the card. 1.) How long are they going to be good for? 60,90,180 days, 9 months, 12 months, Indefinite? 2.) IF you do not use all the money on the card (which I could hardly believe any body getting a refund wouldn't use it all) and the card is still good the next year, will they issue a new card with the new refund, and in effect the person having 2 cards? 3.) What happens if the card is lost or (God forbid)stolen, what about a replacement of the amount that was still on the card, how will that be handled?
Nope from what I'm seeing, this is NOT a good substitute for a check or direct deposit.
DONT DO IT It is a bad idea. It might be less expensive to give out debit cards but it also gives the
gov't a means to track what you spend the money on. If you don't want them to see then go to an atm and spend the extra on fees. I for one don't think the feds need to know what is spend my refund on, thank you very much.
I work with Direct Deposit of checks and all banks and debit cards have different rules. It's best to call the 800 number on the back of the card or to check with the banking agency that handles the debit card, but usually the first inquiry of current funds on the card is free but charged for other inquiries. This debit card might also serve for any other 'deposits' of money depending on the banking agency - call for details. IF the person receives any other federal check (Social Security, Supplemental SSI, Railroad Retirement, Veterans, Civil Service) they might possible be set up for Direct Deposit on that card. Also check with the 800 number of the banking institute to see if any other money from personal sources can be deposited on that card.
My advice is to get a bank or credit union account if possible! Having an actual banking institute to call or go to is helpful. BUT if you only have a card: write down all the numbers (card number, your name as it appears on the card, 800 number from the back for customer service, 3 - 4 digit security number from the back, and account number you will get from calling the customer service 800 number on the back of the card) to keep in a safe place if your card is misplaced or stolen! Note: the debit card number on the front IS NOT the account number.
Hope this helps and this is just the way it's going to be, good or bad.
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