Without a bank capable to easily acquire money with tax return bank cards

Tax refund are, because of electronic banking and tax filing, harder to give to those without bank accounts. There is a recommendation from the Treasury Department to give tax refund debit cards out to help this. Those without financial institution accounts, also called “unbanked” or “underbanked,” don’t obtain any help when it comes to the IRS transferring funds electronically for tax refunds. Weeks are taken for tax refund checks to get to the right place. Instead of waiting for that check to arrive, “refund anticipation loans” are generally taken out by the unbanked. Printing and mailing checks cost millions of dollars. The taxpayers end up paying for it. Resource for this article – Tax refund cards will help the unbanked get their money faster by Personal Money Store! .

Tax refund debit cards available

Tax refund debit cards will make the process faster. The Associated Press reports that while direct deposits show up in financial institution accounts in eight to 15 days, income tax return checks can take six weeks to arrive within the mail. Borrowing against a tax return can mean steep fees on return anticipation loans for numerous without financial institution accounts. Several hundred thousand taxpayers will be capable to obtain a debit card with the pilot income tax refund program starting next year. The tax refund debit cards will work like checking accounts — without the checks or the financial institution. The cards will be insured like bank deposits and will contain consumer protections from unauthorized purchases if they are lost or stolen. Bill-paying services could be stored on the bank cards as well.

Working class and bank accounts

The Center for Economic Progress estimates up to 26 million taxpayers could benefit from tax return debit cards. That number was reached by subtracting direct deposit refunds from the 2010 tax season– 70.3 million — from total tax refunds of 96.3 million. Automated Trader reports on the purpose of the program. Evidently the Obama administration wants more people to view how easy it is to have a financial institution account. ”Bank on USA” is a program where low-to-moderate income working class are encouraged to obtain into banking and got a $50 million request sent to Congress for the 2011 budget. About 9 million households have financial institution accounts, as shown in a FDIC 2009 survey.

Refund anticipation loans to die out

The Obama administration is attempting to help those in risky financial situations discover better way to work with finances with the tax refund debit card initiative. Last month there was already a policy change announced, says the Wall Street Journal. beginning within the 2011 income tax season, the IRS will no longer provide tax return companies with “debt indicators” used by banks to process return anticipation loans. Now banks are having a harder time making the short term loans that end up with annual percentage fees between 50 and 500 percent on them.

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Associated Press

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Automated Trader

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