To speed up tax refunds, the U.S. Department of Treasury is offering 600,000 prepaid debit cards to families who may not have a bank account.
Letters inviting taxpayers to activate and use MyAccountCard prepaid Visa debit cards for their 2010 federal tax refunds are being mailed this week, according to a press release from the Treasury.
The pilot project was announced on Jan. 13. As with any prepaid debit card, the MyAccountCard can also be used for everyday financial transactions such as receiving wages by direct deposit, withdrawing cash, paying bills, building savings and making purchases.
But unlike so many prepaid debit cards, fees on the MyAccountCard are low.
In-store purchases, online purchases, getting cash back with purchases, online bill pay, adding money to the card with direct deposit, withdrawing cash at more 15,000 ATMs nationwide, and balance inquiries by phone, by text or at in-network ATMs are all free.
You'll pay $4.95 to replace a lost or stolen card or for requesting a second card. Make a withdrawal with the card at an out-of-network ATM and you'll pay a $2.50 fee plus any fee charged by the ATM owner. And you'll pay 50 cents for a balance inquiry at an out-of-network ATM.
If you use the MyAccountCard outside the United States, you'll pay a 3-percent fee of the transaction amount.
"Treasury has made a good deal for consumers eligible for the pilot project," says Lauren Saunders of the National Consumer Law Center. "The MyAccountCard is a well-designed prepaid card that can be a good alternative to bank accounts. It has low fees, free access to customer service, and can be used year round for routine financial transactions."
Two key fees that you'll want to watch out for with MyAccountCard prepaid Visa debit cards are monthly fees and fees for adding money to the card at retail locations.
You'll pay up to $4.95 when adding money to the card at 50,000 retail stores nationwide including Walmart, Walgreens, CVS, 7-Eleven, Kmart and Rite Aid.
Depending on the card, you may pay a monthly fee up to $4.95. And some cards in the pilot project charge no monthly fees.
Interested in getting a prepaid debit card of your own? Shop carefully. Fees on prepaid debit cards vary widely.
Typical fees on prepaid debit cards include fees for activating the card and reloading value on the card. But you'll also want to watch out for fees for checking your balance, calling customer service and using the card to withdraw cash at an ATM.
Consumers may qualify for prepaid debit cards even if they have bad credit, though most prepaid cards don't help to build a credit history at the three major credit-reporting agencies.