How to Avoid Fees on Prepaid Credit Cards
With today marking the last day to file taxes, many are wondering about accepting refunds in the form of a Pre-paid Visa card that is being offered by some tax filing companies.
The pre-paid visa card program was developed by the IRS last year to help those who don't have bank accounts to save on check cashing fees. The government canceled the program in 2011, after only an estimated 2000 people signed up.
Now however, pre-paid Visa cards are being offered by tax filing companies like TurboTax and H&R Block. One of the benefits of choosing a pre-paid Visa is that tax filers can get their returns up to 10 days sooner than those who opt for paper checks.
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However, despite the conveniences of the cards, Yahoo finance has dispelled the cards due to hidden fees that can eventually amount to far more than the original check cashing fee, which usually does not surpass three percent.
"Prepaid cards of any type often come with plenty of fees. The TurboTax prepaid card has a $5.95 per month maintenance fee if you have less than $50 on the card, and after your one free ATM withdrawal, each subsequent withdrawal will cost you $2.50," Yahoo Finance reported. "The TaxAct prepaid card has a monthly fee of $2.50, an activation fee of $16.95, and fees for speaking to a customer service agent."
For such reasons, it may be best to opt out of choosing a pre-paid card. It is also difficult to use the remaining balance on the card when an odd amount is left, for example your total purchase is $25 and you have $28.79 left on the card.
Tax filers with checking accounts that are looking to get quicker returns can instead turn to direct deposit which often means getting back tax returns in as little as three days. For those who do not have a checking account and have opted to risk using a pre-paid Visa, it is best to withdraw the entire amount from the ATM in one transaction, which could help avoid fees.
