Tax refund is the restitution of extra tax to the taxpayer from the state or federal government. Getting a tax refund means you made an error when filling out the IRS form or forgot to update some relevant information. There are two main ways by which beneficiaries of tax refunds receive their cash from the IRS. The older method and which had been in operation for a long time is sending cash refund checks through the mail. However, this method was faced with some serious shortcomings like high cheque cashing charges which would reduce the refunded amount substantially. Other problems were losing cheques on the way, cheques being returned to IRS as undeliverable, and theft. To address these problems, tax refunds through prepaid debit cards were introduced.
This mode of tax refunds, allows different cardholders to receive money directly onto their reloadable prepaid cards. From these prepaid cards also, the owners are able to manage and monitor their tax refunds unlike with the old cheque system. It has proved to be a more efficient way of dealing with tax refund issues.
How to Set up Direct Deposit of a Tax Refunds to a Prepaid Cards
The good thing is, prepaid Visa cards can be used by even people without bank accounts. Once they connect their visa cards with the IRS, their refunds are directly sent to them. To establish a direct deposit to a prepaid card, all the beneficiary requires is a routing number and account number associated with his/her prepaid visa card. Most of the tax preparers provide these details during registration and also there exist other means that one can use to get them.
For example, a card owner can sign into their online account portal and check on the direct deposit section. There are other cards that provide instant short text services where one can request their routing number via a mobile phone text and receive them instantly. An example of such cards is NetSpend whose members can text the word “DIRECT” 22622 to receive their account and routing numbers.
Once routing and the card numbers are filled on form 1040 accordingly, then a direct deposit of tax refund to the prepaid card can be made. However, one should pay close attention to these details as they determine the account number to which the refund will be deposited.
Top 8 Best Prepaid Cards for Tax Refunds Payment
Among many, below are samples of the best effective types of tax refund cards.
1. Rush Card
This is considered to be the best-prepaid visa card. The major reason behind this consideration is that it offers bonuses of up to $30 for the direct deposit made to the card. People who deposit $3,000 or more of their tax refund are entitling to a $30 bonus. On the other hand, there is a reward of $20 to RushCard ranging from $2,000 to $2,999. The card also is so well managed with user guides such that having one’s refund directly deposited into their card isn’t complicated. For example, there are instructions that when a person is filing a joint return, the RushCard should bear the name of the first person on the returns file.
2. NetSpend Prepaid Card
This card also bears step-by-step instructions to the users on how to completely set up their accounts and have their refunds deposited directly to their prepaid card. Immediately when one registers for this card, they are provided with both routing and account numbers hence the owner doesn’t have to struggle to get them. Another major benefit of Netspend is that it offers a $15,000 card limit which caters to almost all tax refunds. Also, this card offers high interest rates for those who want to invest their refunds with the company.
3. Brink’s Prepaid Mastercard
Brink’s Prepaid Mastercard is just like Netspend offers a savings limit of up to $15,000 with savings expansion provision. It also has an elaborate user guide that helps in setting up user accounts for direct tax refunds into their prepaid cards.
4. Walmart MoneyCard
This card is more ideal for Walmart frequent shoppers to receive their tax refunds. With this card, the refund can be received within eight days compared with a cheque which can take up to twenty-eight days. Also, it has other great benefits such as cashback rewards and savings vault plans. Also, the users can easily track their refunds using the “Where’s my Refund” tool offered by the IRS.
5. Green Dot
This is among the top-ranking tax refund prepaid cards. Green Dot visa runs contests occasionally whose winners are awarded handsomely. The rewards vary from one year to another. For example, there are times when the contest winners get their tax refunds doubled. Other benefits related to this visa card include; for anyone who loads $1,000 or more get their monthly fee waived, people can get their routing numbers easily by texting the word DDinfo to 37267, and finally it offers the users simple instructions on how to get refunds deposited into their Green Dot Visa.
This card offers one of the most important features that help cardholders. Apart from guiding its users on how to receive their refunds, AccountNow helps people to prepare their tax returns. This is made possible by the partnership of AccountNow and ezReturns.com. It also runs contests in which the winner’s tax refund is tripled up to $15,000.
This card is among the ones with the least charges. Kaiku also has elaborate features that enable people to carry out online transactions at little or no charges. For example, people can pay their bills online, transfer money from their cards to other people, and receive their money surcharge-free in the ATMs up to a certain limit. Also, Kaiku cardholders can truck their refund deposits using the IRS tool “Where’s My Refund”.
Pros and Cons of Tax Refund Prepaid Cards
- Security– Sometimes the tax refunds made through cheques end up getting lost, stolen, or are returned to IRS because their owners cannot be traced. Therefore, if someone makes use of prepaid cards, their money security is guaranteed.
- Speed-Unlike with the other method of paper cheque, refunds made directly to prepaid cards takes a very short period of time. Depending on the type of card one uses using, it can take even less than ten days. This is not the case with cheques which can take even months before they get to the owner. Also, money in prepaid cards, the owner doesn’t have to wait as is the case with cheques which one has to wait for it to mature.
- No cheque-cashing fees-The fees required to cash an IRS cheque is always very high and can affect a person’s refund very negatively. Depending on the tax preparers, a card user can ensure that he/she spends very little on charges.
- Management-With direct deposit to the card, the cardholder can monitor his refunds virtually and doesn’t have to keep running to the mailbox to check whether his refund has been sent. Also, once the correct data has been entered, the money will always be deposited in that account exactly the same date every month. This allows one to make informed decisions based on that knowledge.
- Wrong data- This is perhaps the biggest challenge when it comes to direct deposit to prepaid cards. In case a person submits wrong information to IRS, that can be a tragedy as the money will be sent to the account number provided. Once the money has been sending cannot be reversed. Unfortunately, once the returns have been made, there’s no option to correct any errors made. Other mistakes that can cost someone are; failure to sign the forms, invalid/wrong social security numbers, or wrong dependent’s name(s).
- Maintenance fees-The prepaid cards companies have convenience fees charged on every cardholder. There are also other charges that are involved such as consultation fees and at times these can accumulate to more than one would be charged to cash a cheque.
- Overdrafts-In case someone takes an overdraft with the card, the tax refund deposited is automatically directed to repaying the debt. This can cause financial straining if one was not ready for such financial decisions.
FAQ – Frequently Ask Questions
Can you get a refund on a prepaid visa card?
Yes. All one is required to do is to fill correctly their routing numbers and account number associated with their visa card and their refund is wired directly. The wait time is greatly reduced to within two weeks.
What is the best prepaid credit card for a tax refund?
RushCard is considered the best prepaid credit card. This is because it offers an excellent user guide alongside an awesome cash bonus of up to $30 when a direct deposit to the visa card is made.
What is the fastest you can get your tax refund?
Depending on the type of prepaid card used, one can get a refund within 8 to 10 days. Using a prepaid visa card, waiting time is the utmost two weeks.
For anyone expecting a tax refund, using a prepaid visa card is the best route to take. However, before jumping to a specific prepaid card, it is advisable that one considers the terms and conditions outlined by the operator. For example, the monthly fees and any other additional charges such as the over-the-counter withdrawal charges, consultations fees, ATMs charges, etc. These charges should not be too high such that they can equal the cheque cashing fees. If this is the case, there won’t be any need for a visa card.
The card features should also be considered ensuring that user navigation won’t be an issue. The card chosen should have a comfortable user interface with step step-by-step instructions to guide the holder on how to operate it.