Without a bank acquire money with income tax refund cards

Tax returns for people without bank accounts are becoming a problem within the era of electronic banking and income tax filing. There is a recommendation from the Treasury Department to give income tax return debit bank cards out to help this. An income tax return electronically transferred isn’t helpful for any person without a bank account, which is also called “unbanked” or “underbanked”. A tax refund check often takes too long to get to get there. Instead of waiting for that check to arrive, “refund anticipation loans” are usually taken out by the unbanked. Plus, the overhead of printing and mailing checks costs millions of taxpayer dollars.

Possible tax refund debit cards

The biggest advantage offered by tax refund debit cards is speed. Income tax return checks take six weeks to come within the mail when even a direct deposit can take eight to fifteen days to show up in the bank, says the Associated Press. Borrowing against an income tax return can mean steep fees on return anticipation loans for numerous without bank accounts. Next year there can be a different option. The pilot tax return debit program could be offered to many taxpayers. Your income tax refund debit bank cards work like checking accounts. The only difference is you will find no checks or banks involved. If the bank cards are lose or stolen, consumer protections stop purchases, and also the bank cards are insured just like financial institution deposits. Bill-paying services could be stored on the bank cards as well.

Obtain a banking account as a taxpayer

The Center for Economic Progress estimates up to 26 million working class people could benefit from tax return debit cards. The number came by subtracting 70.3 million, direct deposit refunds from the 2010 tax season, from tax refunds of 96.3 million. Automated Trader reports on the purpose of the program. Apparently the Obama administration wants more people to view how easy it is to have a financial institution account. A $50 million request has been submitted to Congress for the 2011 budget to create “Bank on USA,” a program to help support state and local efforts to get more low-to-moderate income taxpayers into mainstream banking. In 2009, the FDIC did a survey on households with financial institution accounts. About 9 million households have them.

Trying to stop refund anticipation loans

The tax refund debit card initiative is part of a broader program by the Obama administration to curtail federal policies that lead to risky financial decisions and provide people with better financial alternatives. Last month there was already a policy change announced, says the Wall Street Journal. Banks use “debt indicators” to process refund anticipation loans, although now those won’t be provided by the IRS anymore starting within the 2011 tax season. Banks will have a more difficult time making short term installment loans. The loans typically would have between 50 percent and 500 percent for the annual percentage fees.

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Associated Press

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Automated Trader

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