South Carolina will be sending residents their state income tax refunds on a prepaid debit card this year, unless they specifically request direct deposit or a paper check. The change is expected to save the state up to $1 million in printing, mailing and administrative costs, but Bank of America, which issues the cards, looks to be the biggest winner of all. That’s because the arrangement allows the bank to charge card users fees for some transactions – from $2.50 to as high as $10.00. Unlike normal debit cards attached to bank accounts, there are no caps on the fees banks can charge. For consumers who don’t have bank accounts, the debit cards might be a convenient alternative. And no doubt the cards will encourage spending, rather than saving, that tax refund.
But why should we have to pay fees to access our own money? Would this be a good cost-cutting move for California? Would you welcome the convenience of swiping, despite the fees?
Samantha Cheek, public information director, South Carolina Department of Revenue
Linda Sherry, director, National Priorities for Consumer Action
Adam O’Daniel, finance editor, Charlotte Business Journal