As if tax preparation companies haven't come up with enough schemes to pry money out of taxpayers' hands, now some tax preparation companies are encouraging taxpayers to load their tax refund on a "convenient" prepaid credit card. Just say no to this new scheme which will leave the tax preparers and banks with more of your hard earned money. Below are five reasons why you should avoid loading your tax return on a prepaid credit card:
- Prepaid credit cards usually have an ATM fee. What that means is that when you go to withdraw your money from an ATM you will be charged by the issuing bank and probably by the bank who owns the ATM. This could easily add up to more than $4 or $5 per withdrawal.
- Even if you try to get around the ATM fee by going to a bank, there is usually a charge to use the teller also.
- Need to make more than a few calls to speak with an agent of the prepaid credit card company? You will need to pay another fee.
- Not using your prepaid credit card enough? There is another fee-an inactivity fee.
- Unlike unsecured credit cards you will not receive any interest payments on the money you have on deposit. Instead you will end up paying a steady stream of seemingly non-ending fees.
While it may be tempting to go ahead and load your tax refund on a prepaid credit card, do yourself a favor and just have the tax preparer issue a check, even if it costs extra.