Expecting a tax refund this year?
Think twice about receiving it by way of an instant-issue, pre-loaded tax refund card. Some large tax preparers, such as H&R Block, market these cards to taxpayers who want access to their refund nearly instantly.
But there's a catch - it can cost you to access your money. And, unfortunately, many taxpayers don't realize this until it's too late.
"They call the card 'free,' but these companies charge an assortment of fees for cardholders to access their money," says Matthew Dodds, senior vice president of consumer lending at Dupaco.
Stacey Hirsch, a teller services representative at Dupaco, says that in addition to your refund cash, the H&R Block cards carry a heavy load of fees, including:
- A $25 cash advance fee, regardless of whether you withdraw all of the money or a portion of it, every time you request an advance. "The best thing individuals should do is withdraw the full balance on the card, then we can put it in their savings account and they have it without (any more) fees," Hirsch says.
- A $2.50 fee, per transaction, to withdraw money at the ATM, in addition to the fee charged by the ATM.
- A $1 denial fee if you try to withdraw a certain amount and it is denied.
- A $1 balance inquiry fee to check on the balance remaining on your card.
"Unless they're using it for purchases, there's going to be fees for them to use their money," Hirsch says. "We've had people come in with $10,000 on their card. If you have that kind of amount, how do you keep track of what's on the card? If you do stop to find out, then you've got another $1 fee."
The best way to receive your refund is to wait for it to be direct-deposited into your bank account, where it's 100-percent free access to your money.
By Emily Kittle