Hank Silverberg, wtop.com
WASHINGTON – An experiment that was supposed to save the taxpayers money may actually be costing them part of their tax refunds.
In Virginia this year there are no refund checks. Not printing them saves money.
Residents get their tax refunds by either direct deposit to their bank accounts or through prepaid debit cards called Way2Go.
As of the first week in April, more than 200,000 of the debit cards have been issued compared to more than $3 million in direct deposit refunds, according to the Virginia Department of Taxation. Virginia state taxes are due May 1.
The debit cards, which are new this year, are designed to help people who do not have bank accounts. But if they are used over time, instead of cashed immediately, there are hidden fees.
The cards are designed to help you clear out your refund in one transaction, says John Kiernan, chief analyst at CardHub.com.
“If they were going to charge everyone to access their money, they would be in really hot water,” he says.
There is one free bank transaction on the card. After that, card holders will be charged a fee. Kiernan says that’s not uncommon with a pre-paid card.
Card holders also are charged a fee at any ATM other than MoneyPass ATMs.
There will be a fee if the card stays inactive for six months. It is as much as $3 a month. Part of the fee goes back to the state of Virginia.
See the Way2Go fee schedule.
So how can consumers avoid the fee?
“Use direct deposit if you can, and if you can’t, try to get your money out of this card in one transaction as soon as possible,” Kiernan says.