Recently, I discussed why consumers needed to rethink getting their tax refund quickly with a refund anticipation loan. The same tax prep companies that push the refund anticipation loan have a relatively new tool to help them make even more money (like the high interest is not enough?) from taxpayers. The loading of the refund anticipation loan (or the regular refund) on a prepaid credit card, issued through, of course, the tax preparation company. Today’s warning involves the Emerald Card from H & R Block.
H & R Block Bank issues the Emerald Card and one of my clients from last week tells me that even if she didn’t take the refund anticipation loan, H & R Block would charge $20 for a check to be issued to her, but the Emerald Card was no-cost. Really? Let’s look at the card agreement, found at this link). Most folks do not realize the following:
1. Unlike a secured credit card, where the issuing bank pays interest on the security deposited with the bank, the Emerald Card does not pay interest to the holders.
2. There is a fee to use an ATM ($1.95)
3. There is a fee to walk into a bank and use a teller (1.5% of the funds withdrawn…for example, withdraw $1000 and it costs you $10.50)
4. There is a fee to call the toll-free number and speak to an agent after five calls.
5. If you don’t use your card for three months, H & R Block can then charge you for the past three months at $2.50 per month.
6. If you want to write a check from YOUR money left on the card, that will cost you $20.00 (I bet that is the $20 fee my client mentioned above).
7. You give up your right to sue H & R Block in court and have a judge decide any legal issues AND you give up your right to participate in any class action against H & R Block.
8. The best for last. H & R Block not only doesn’t pay you interest on the YOUR money in THEIR bank…but they get to use the money as they wish:
This Card consists of a stored value sub-account and a savings sub-account. The Bank may periodically transfer funds between these two sub-accounts. On a sixth transfer during a calendar month, any funds in the savings sub-account will be transferred back to the stored value sub-account. The savings sub-account will be non-interest-bearing. The savings sub-account will be governed by the rules governing our other savings accounts. This process will not affect your available balance, FDIC insurance, protection, or your monthly card statement.
Folks want their refund quickly and it is my opinion that loading a refund onto a prepaid Mastercard and charging fees costs a consumer too much money. When you add in the refund anticipation loan as the source of the money, it is a double-dipping profit-making money machine for some companies. Consumers beware!!
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