The Treasury Department is launching a pilot program to deliver tax refunds via prepaid debit cards rather than checks.

The plan aims to cut down on the administrative costs associated with checks and to help lower-income taxpayers without bank accounts, The Wall Street Journal said.

The government will send letters to about 600,000 low- and moderate-income taxpayers inviting them to activate a debit card that can receive direct deposits.

The U.S. issues about 45 million paper checks for tax refunds each year. Each check costs the government about $1, while each direct deposit costs about 10 cents.

"My goal, one that's been talked about for many years, is to get out of the check-payment business," said Richard Gregg, Treasury's Fiscal Assistant Secretary.

The government is also working to lower the cost of financial services for consumers who don't have bank accounts. Many of these people rely on expensive neighborhood check-cashing outlets, making it more difficult for them to save money.

The new Treasury pilot program will provide some consumers with a debit card that has many features of a checking account, including free bill paying and ATM withdrawals.

"They can use it in an ongoing way to pay bills, save money, get cash and have a real basic, robust, safe and convenient transaction account," said Treasury Financial Access Innovations Director Joshua Wright.

Increase your money and finance knowledge from home

How to Buy a Car

How to get the best deal and buy a car with confidence.

View Course »

Understanding Credit Scores

Credit scores matter -- learn how to improve your score.

View Course »

Add a Comment

*0 / 3000 Character Maximum


Filter by:

It also provides banks and financial institutions another income source to "bank" on for all those non-loans and non-mortgages they are providing us. Dah!! Sorry, I just don't trust the banking industry right now. Not to mention all that identity thievery going on.

January 13 2011 at 1:09 PM Report abuse rate up rate down Reply

they will be happy to have their chip activated if you are handing out dead prez coupons....

January 13 2011 at 11:49 AM Report abuse rate up rate down Reply

I am one of those people that refuse to 'go green' and continues to receive paper checks and bills rather than using direct deposits and email. First of all, the business and government entities aren't making it worth my while - they are not splitting their savings with me - so, going paperless has no direct pay off for me. Second, similar to the comment from leggendd, banks collect fees when cards are used and I have no desire to further serve their selfish interests.

January 13 2011 at 9:10 AM Report abuse rate up rate down Reply

Atm cards remove money for the economy they are based in.. Let's look at unemployement in NJ that has moved to debit cards.. 4 billion in unemployment benefits..When a card is swiped the retailer pays the processing fees of up to 3 % per dollar spent... Lets use 2 % times 4 billion.. Equals 800 million is now out of the New Jersey ecnonomy and sent to Conn. for Bank of America SHAREHOLDERS and other states for processing fees.. GOOD JOB GOVERNMENT MORONS... not to mention ATM fees up to three dollars.. WHY don't you set up mandatory bank accounts where these folks can go get their money for free..

January 13 2011 at 8:59 AM Report abuse +3 rate up rate down Reply