The IRS will give out 600,000 tax refunds in the form of pre-paid debit cards this year, which could prevent some people from using costly tax return anticipation loans to get their money right away, according to consumer advocates.
The debit card program, called MyAccountCard, will offer many features that people without bank accounts like, including no fees for purchases, free withdrawals from many ATMs, and cash back at some retailers, according to the Treasury Department’s press release on the program.
“We recommend that consumers who receive the Treasury mailer should choose the low-cost MyAccountCard instead of paying steep fees” for return anticipation loans, Chi Chi Wu, a lawyer with the National Consumer Law Center, said in a press release.
Unfortunately, not just anybody can participate. Only the 600,000 people who receive letters next week from the IRS will be eligible. The letters will invite them taxpayers to open a MyAccountCard Visa Prepaid Debit Card, and explain the details of the program.
Since this is a pilot program, the letters will make different offers to different people at random to see which features are more popular. Half will offer cards with no monthly fees; the other half will have to pay $4.95 for the cards. Some cards will charge a fee up to $4.95 to make in-person deposits on the cards at major retailers including Wal-Mart and K-Mart. Withdrawing money from out-of-network ATMs will cost $2.50, and checking a balance will cost 50 cents.
As it unveils its new debit cards, the Treasury Department is beginning another pilot program for people who already have debit cards. The program will be available only for a few tens of thousands of people, according to the Treasury statement.
“The tax-time pilots build on the Obama Administration’s continuing efforts to increase electronic payments and to empower Americans to make informed financial decisions,” Treasury said in a press release.