Should You Take Your Income Tax Return as a Prepaid Credit Card?
Some Tax Prep Companies Offer a Prepaid Credit Card For Your Rapid Refund Loan
Some tax preparation services such as H&R Block are offering a rapid refund loan in the form of a prepaid credit card. Are these loans a great way to get your hands on the prepaid credit card you need, or do they cost more than they're worth? Before you say yes to any rapid refund product, there are some things you need to know.
It's Not Free
No matter what anyone tries to tell you, the fact of the matter is that you're going to have to pay for a rapid refund loan whether it's in the form of a prepaid credit card or not. Just how much you pay will really depend on how much your anticipated refund is, but you're going to pay something nonetheless.
Is It Worth It?
If you ask someone if you should take a prepaid credit card as a rapid refund loan, you'll get mixed reviews. Some say it's ridiculously expensive and others say the fees are reasonable. Who's right?
The interest rate for a refund anticipation loan does seem extraordinarily high at first. However, it's important to realize that you're not paying this balance off over the course of a year, you're paying it off within a month or two with your tax refund.
For example, H&R Block's refund anticipation loan has an interest rate of 36 percent and a refund account fee of $29.95. If your tax return is $1,000 your total fees for the prepaid credit card loan will be about $40. When you consider that some prepaid credit cards have activation and processing fees that equal more than that, it's actually not a bad deal.
Caveat Emptor
The most important thing to remember is that many of these prepaid credit card refund anticipation loans can be misleading. They advertise the money can be on your card the same day, but I've heard reports of it taking weeks to get. So if you're getting the card so you can have quick access to your tax refund, you might want to think twice.
On the other hand, if you're taking advantage of this type of refund anticipation loan so you can finally get the prepaid credit card you've been needing, this may indeed be the ideal solution for you.