Get cash faster with income tax refund bank cards for the not banked

If you don’t have a bank account, it is going to be hard to get an income tax return. This is because electronic banking and income tax filing are becoming so popular. There is a recommendation from the Treasury Department to give tax return debit cards out to help this. People without financial institution accounts, the so-called “unbanked” or “underbanked,” do not benefit from the electronic funds transfer of a income tax return to a bank account from the IRS. A tax refund check often takes too long to get to get there. Rather than waiting for that check to arrive, “refund anticipation loans” are generally taken out by the unbanked. Plus, the overhead of printing and mailing checks costs millions of taxpayer dollars.

Getting a tax refund debit card

The biggest advantage offered by tax refund debit cards is speed. As outlined by the Associated Press, direct deposits take eight to fifteen days to obtain the money into an account. Getting a income tax return check can take even longer with a six week wait for numerous people. People without bank accounts are likely to borrow against their tax returns, paying steep fees for a refund anticipation loan. Starting next year, a pilot tax refund debit card program could be offered to a number of hundred thousand working class. 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. The cards may also be able to store other income and consist of bill-paying services.

Working class and financial institution accounts

The Center for Economic Progress estimates up to 26 million taxpayers could benefit from tax refund debit bank 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 that the Obama administration is exploring ways to encourage more individuals to obtain financial institution accounts. 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. An FDIC 2009 survey showed roughly 9 million households were without bank accounts.

Return anticipation loans to die out

The Obama administration is trying to help those in risky financial situations discover better way to work with finances with the tax return debit card initiative. Last month there was already a policy change announced, says the Wall Street Journal. beginning in the 2011 tax season, the Internal Revenue Service will no longer provide income tax return businesses with “debt indicators” used by banks to process refund anticipation loans. The move makes it harder for banks to make the short-term loans, which come with high fees that pencil out to annual percentage rates from 50 percent up to 500 percent.

Additional reading

Associated Press

google.com/hostednews/ap/article/ALeqM5gjOACVZgIYIFoYxqpOl-uISuMxiAD9HVPC6G3

Automated Trader

automatedtrader.net/real-time-dow-jones/14805/-us-treasury-to-offer-low_cost-bank-accounts-for-tax-returns