Few States Using Debit Cards For Tax Refunds

The tax season of 2011 has seen release of income tax refunds by the use of pre-loaded debit cards.

This launch has been targeted towards Americans who do not have a bank account or those people who do not want a bank account.

The Treasury said that the purpose of these debit cards launch was to give a

safe, convenient and low-cost financial account for the electronic delivery of their federal tax refunds,

according to online news source Bank Rate.

Many individuals without a bank account have to go through a pay service when they get their tax refunds checks and cash them. For such people getting a refund through debit card is a better option.

This is also helpful to stop people who are opting to take out over priced refund anticipation loan, which is a short term loan offered by professional tax preparation services on a flier’s anticipated refund amount. Those people who have a bank account usually choose to get their refunds through direct deposits which can lead from 10 days to 3 weeks to reach the recipients.

Now as we have stepped into 2012 there are some states which have taken government-issued debit cards refund plan into new era by totally abolishing the option for taxpayers to get their refund by paper checks. States including Louisiana and Oklahoma have made it compulsory to all the citizens who deserve a tax refund to choose one of the two options.

One is to get the refund directly into their bank accounts and other is to receive the refund on a pre-loaded debit card. The option of paper checks have been completely abolished in both these states. Oklahoma is estimating to save millions after not sending the paper checks and Louisiana estimates a savings of about $500,000 yearly.

Georgia which took part in the debit card tax refund trail program in the last year as offered their taxpayers to pick a choice between the three options including direct deposit, paper check and debit card. Georgia’s Department of Revenue is expecting to take the route of anticipates both Louisiana and Oklahoma and abolish paper checks completely

Oklahoma settlers who received their tax refunds via debit card in this year had to use them quickly after they received it in order to avoid being penalized. A $1.50 monthly deduction will be taken from the refund amount loaded on the card after a 60 day of inactivity.

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