Getting your tax refund back on a prepaid card may sound convenient, but does it make financial sense?
For those without bank accounts, a prepaid debit card may be the fastest way to get an income tax refund. It’s an option offered by all the major tax preparers. But for those with bank accounts or who can wait a little longer, choosing to direct deposit into a checking or savings account or simply holding out for the traditional government check will save money.
Watch out for fees.
The biggest downside to receiving your income tax refund on a prepaid debit card are the various fees that come with the cards.
You have to pay to access your own money. You’re going to see your hard-earned tax refund nickeled and dimed to death with fees. Never pay to access your money and that includes getting cash from an ATM.
A prepaid card can feature an enrollment fee, a monthly maintenance fee, ATM withdrawal fees, ATM balance inquiry fees and a fee to convert the remaining balance into a bank check, among others.
If you have a bank account, there’s no advantage whatsoever to getting your tax refund on a prepaid card. You needlessly would give away some of your tax refund with the fees that come with these cards. Don’t do it.
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