If you don’t have a bank account, you can easily have your tax refund deposited directly onto a prepaid credit card.
Direct deposit of a tax refund is great news for some. You can get your refund added to your checking account in about two weeks rather than the six to eight weeks it takes for a paper check refund. And you avoid the hassle of schlepping to your bank to deposit the refund check.
For those who do not have a checking account, however, the benefits of direct deposit are elusive. The good news is you don’t have to pay a fortune for a tax refund anticipation loan to get your refund faster. With a free or low cost prepaid credit card, you can have your tax refund deposited directly onto the card in as little as two weeks from the filing of your return. You get your refund just as quickly as if you were using a checking account, and you avoid the aggravation of dealing with a paper check. Basically, your prepaid card will function similar to a checking account.
Tax Refund Prepaid Cards
The first step is to get a prepaid Visa or MasterCard that allows direct deposit. Often called tax refund debit cards, these prepaid cards are really no different than any other reloadable card. Not only to most prepaid cards today accept direct deposit, they even encourage it. For example, AccountNow Visa and MasterCard offers a $25 cash bonus for just setting up direct deposit and meeting the terms of the offer. You can also select from a number of prepaid credit cards with no monthly fees and even no activation fees.
How to Set Up Direct Deposit
Once you have a prepaid card, it’s easy to set up direct deposit of tax refunds, paychecks, and even government benefits checks. As with direct deposit to a checking account, you need two pieces of information: (1) the routing number for the card, and (2) the account number. The key here is that the account number is not necessarily the number on the face of the prepaid card. To get the routing number and account number, simply contact the company that issued the prepaid card you’ve decided to use. Some even have online tools that can generate the routing number and account number for you.
Final Thoughts
When deciding on a card, you should make sure the card offers direct deposit (most do) and very low fees. If you have a large refund due to you and you want to avoid making such a large interest free loan to Uncle Sam, talk to your employer about changing your W-4 form. You may be entitled to claim more allowances which would reduce the amount of money withheld from your taxes. However, if your tax refund was unusually large because a one-time credit, such as the homebuyer’s tax credit, you should hesitate before making changes because if you don’t have enough money withheld you may have to pay extra taxes and penalties.
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Direct deposit is a major advantage of prepaid credit cards. Particularly with tax refunds starting to arrive, it is convenient to be able to access that money immediately. Prepaid cards, like those from Netspend.com , provide this feature and many more conveniences to make accessing and managing your money easier.