Tax Refunds – your money, don’t pay to get it

Last year, the IRS processed 118,479,904 individual income tax refunds, issuing almost 3 percent more refunds last year compared to the same time the year before. Before you choose how to get your refund, know your options.

Even if you do not have a traditional bank account, there are several ways to get your tax refund including a tax refund loan, direct deposit, and a paper check.

A tax refund loan gives you quick access to your refund, but it comes at a high price – up to 2,000%! Tax refund loans, also known as “instant refund loans” or “refund anticipation loans” give consumers a short-term loan, usually 10 days, and costs anywhere between $29-$100 plus filing fees. This type of loan equates to an APR of approximately 222%. According to the Consumer Federation of America and the National Consumer Law Center, 12 million taxpayers paid over $900 million in fees last year on these types of loans. I’m pretty sure that if someone asked you if you’d like a 10 day loan for 222%, you’d either turn and run away or ask if they need a loan under the same terms.

Another way to get your tax refund is the traditional paper check. Last year, millions of paper refund checks were unable to be delivered due to address changes between the time of filing and delivery. Moreover, of the deliverable paper checks, some refunds took up to three months to be issued and received. What about lost or stolen paper checks? We hear every year on the news how mailbox theft is increasing, particularly during the months following the tax filing deadline of April 15th. Refund checks are easily identifiable and targeted by thieves.

If you are one of the millions of Americans without a bank account, how do you cash your refund paper check? If you use a check cashing store or other expensive check cashing alternative, you might want to explore other options, like paycards. It may seem that using a check cashing store is a convenient option, however, these stores charge 5% or more in fees. That’s $100 to cash a $2,000 check!
How can you avoid paying high fees and quickly get your money? Paycards are a great way to receive tax refunds using direct deposit. They allow you to get your refund faster while eliminating the risk of mail fraud, high costs of a refund loan, and check cashing fees.

Paycards are a safe and convenient way to direct deposit your tax refund. Just give the tax preparer your account and routing numbers, and your refund is deposited to your card directly. The same paycard you use to direct deposit your tax refund can be used to direct deposit your paycheck, child support, alimony, government benefits, and more. Just because you don’t have a bank account, doesn’t mean you can’t receive electronic payments. All you need is a paycard.

Direct Deposit Using a Paycard
Cost: Up to $20
Risk: Little to no cost or risk
Summary: Very low cost or risk

Traditional Paper Check. Cashing a check cashing store
Cost: up to 5%of check amount
Risk: High cost and risk of delay or undeliverability
Summary: High cost and risk

Loan on anticipated tax refund
Cost: Averages 222.5%
Risk: Extremely high cost, high risk and the loan is short term

To avoid the high costs and risks associated with traditional paper checks and anticipation loans, have your tax preparer contact www.tfgcard.com or enroll online at www.tfgcard.com/tax.