The U.S. Department of the Treasury announced last week that it will be launching a pilot program this year to offer 600,000 randomly-selected taxpayers the choice of a “safe, convenient and low-cost” prepaid card for the electronic delivery of their federal tax refunds. The new account card option, called the “MyAccount” card, aims to offer tax refunds on a prepaid card with better consumer protection features for Americans with limited or no access to traditional banking services. With the MyAccount card, taxpayers can get their tax refunds fast instead of paying steep fees for refund anticipation loans.
Here are some of the features of the MyAccount card:
-no activation fee
-a monthly fee of no more than $4.95
-free ATM access at over 15,000 locations
-free point-of-sale transactions
-free online bill pay
-free direct deposit
-free customer service via telephone
-free online and text message balance alerts
To see the full list of fees, click here.
The card does charge for some services such as: in-person teller withdrawal ($2.50); out-of-network ATM use ($2.50 withdrawal, $.50 balance inquiry); and a replacement card ($4.95). If you want to reload funds using a third-party service like Western Union or MoneyGram, you will also have to pay a fee. And if you want to transfer funds onto the card from your bank account, your bank may charge you a fee.
The MyAccount card also comes with protections under Treasury’s new interim final rule for all federal payments loaded onto prepaid cards. The rule sets out certain requirements for contracts between Treasury and the card issuer. Under the new rule, issuers have to ensure that:
-the funds on the card are individually insured up to the full FDIC insurance cap,
-the card is not linked to a line of credit that would automatically deduct funds from your federal payment funds, and
-the card has, by contract, the same consumer protections that employer-arranged payroll cards receive under federal regulations.
If you’re a taxpayer who already has direct deposit for your tax refund, we advise you to keep it. However, Consumers Union recommends that any taxpayers without bank accounts who get the Treasury offer for this pilot program choose a MyAccount card for their tax refund instead of getting a costly refund anticipation loan or refund anticipation check.
To learn more about government-issued prepaid cards, click here.
To learn more about other types of prepaid cards, click here.