Buzz
Earlier this week, we explored whether choosing an Amazon gift card for your tax refund is ever a good option (my conclusion, for what it’s worth, is a definite no).
But what happens if your tax preparer suggests placing your tax refund onto a prepaid debit card? Could this be a wise choice?
Several well-known tax preparation services, including H&R Block, TaxAct, and TurboTax, offer the option of receiving your tax refund via a prepaid debit card. These cards provide a bit more versatility than an Amazon gift card since you can use them anywhere debit cards are accepted, but you’re still restricted to using your refund on spending.
There are some benefits to choosing a prepaid debit card for your tax refund. If speed is a priority, the refund often arrives faster through a tax preparer’s co-branded debit card; once the IRS approves your return, you typically get the money right away, without waiting for the government to mail or direct-deposit a check. Some tax preparers also offer incentives for selecting a debit card refund—so if every penny matters, you could earn a bit more by opting for this method.
Additionally, as NerdWallet points out, prepaid debit cards can serve as helpful financial tools for those without checking or savings accounts:
If you don’t have access to a bank account or can’t qualify for one, a prepaid debit card can be a viable choice. For a fee, you’ll have easy access to your funds without the hassle of finding a place to cash a large tax refund.
The major drawback of using a prepaid debit card for your tax refund is the fees. Most cards charge ATM fees (either for all ATMs or just for those outside their network), and some impose additional charges.
For example, the H&R Block Emerald Card charges $0.95 per transaction if you use the card to pay bills through H&R Block’s bill pay service, with fees increasing for expedited bill payments. If you need to reload the card, “fees of up to $4.95 may apply.” The American Express Serve Free Reloads card, which TaxAct offers, allows unlimited free reloads but comes with a $6.95 monthly fee (unless you reside in Texas, New York, or Vermont).
So, should you opt for a prepaid debit card for your refund? Personally, I’m leaning toward no, unless you urgently need the money or don’t have a bank account—but I’m interested in hearing your experiences with prepaid debit tax refunds and whether you’d recommend them.
