Paying a tax bill with a credit card has long been an accepted practice by American taxpayers.
Now Uncle Sam is working to expand plastic tax practices. This time, though, he wants people without bank accounts to try the federal government's new Visa debit card as a way to receive their tax refunds.
Just in time for the tax filing season, the Treasury Department has launched a pilot program targeting 600,000 low- and moderate-income individuals across the United States as potential users of a federal MyAccountCard prepaid Visa debit card.
With this card, says the Treasury in announcing the program, taxpayers will have a "safe, convenient and low-cost financial account for the electronic delivery of their federal tax refunds."
In addition, said Deputy Secretary of the Treasury Neal Wolin in the statement detailing the program, the debit card also "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."
Right now, however, the big draw is tax refunds.
Folks without bank accounts often must pay a service charge to cash refund checks. And because they don't have an account into which the tax refund can be directly deposited, they must wait for the paper check to arrive via mail.
Or, if they don't want to wait, they get a refund anticipation loan. A speedy direct deposit onto the debit card could be yet another blow to these costly tax-related loans. Yes, that's me you hear cheering over your Internet connection.
The debit cards will offer its owners mostly free services. They include no charge for the addition of a refund amount to the card, as well as free point-of-sale transactions, free online bill pay, free cash withdrawals at more than 15,000 ATMs nationwide and free cash back at participating retail stores.
Some other uses, however, such as out-of-network ATM usage or having other funds loaded on the card, will render a fee.
The Treasury actually is randomly sending out four different types of cards in this pilot:
- Card with no monthly fee and no linked savings account
- Card with no monthly fee and a linked savings account
- Card with a $4.95 monthly fee and no linked savings account
- Card with a $4.95 monthly fee and a linked savings account
The options, says the Treasury, will help it "evaluate which product features, fee structures and marketing messages generate the greatest positive response from taxpayers." And those results will determine whether it's worthwhile to make a debit card account "an integrated part of the tax filing and refund process" for all taxpayers.
The MyAccountCard Visa will be issued by Bonneville Bank, with additional services provided by Bonneville Bank through its program manager, Green Dot Corp., a prepaid financial services company.
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