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Another temptation to spend your tax refund: the Prepaid Cardin Taxes Accounting and Industry News
In another attempt to lure more desperate clients, H&R Block announced recently that it has partnered with MasterCard Canada and DC Bank, which provides prepaid cards, to create the H&R Block Advantage Prepaid MasterCard. It is but another temptation to ensure that you only do one thing with your tax refund – that is to spend it.
“You put something on a prepaid card, what are you going to do? You have to use it. You have to spend to use it.” – Scott Hannah, Vancouver-based chief executive of the Credit Counselling Society.
For many years, H&R Block, Canada’s largest tax preparer, has allowed tax filers who are owed by the government to get their money early for a fee. This system is regulated by the federal government where in under the rules, on the first $300 of the tax refund, you get $.85 on the dollar and then $.95 on the dollar for everything after that. Although it is hardly a fair deal for the taxpayer, there is surprisingly a lot of people who opt for this especially those that have some cash flow problems and considering that when you file your tax return online and get your refund in about 7 days.
The H&R Block Advantage Prepaid MasterCard is another option for the clients to get their tax refund instead of getting a cheque. The money is put directly onto a prepaid card and can be accessed at an ATM with a $2.95 fee per transaction.
According to Mr. Scott Hannah, who agrees that someone who goes into H&R Block with the idea of getting a tax refund has a “different mindset” than someone who is planning to save the money, “I don’t even want a great tax refund because it means I’ve given the government a free loan all year long.” And as with every other person with financial knowledge will tell you, proper tax planning is always the way to go to ensure that you do not give your money to the government interest-free.
Source: Financialpost.com, “Prepaid card loaded with tax refund is recipe for waste” by Garry Marr, February 7, 2013, http://business.financialpost.com/2013/02/07/prepaid-card-loaded-with-tax-refund-is-recipe-for-waste/