February 8, 2013

For those of you fortunate enough to actually get money BACK from the government this year, you’ve got some choices to make. Primarily, you’re going to have to decide how you want to receive your money. Before you go off making a horrible mistake because you’ve fallen for some advertisement on TV or the Internet telling you how you should accept your refund, here are some tips to help you make the decision…

First off, you’ve waited ~365 days since you started paying taxes and, little by little, earned your refund. Stay patient for a few more days. There’s no benefit to you taking your money in some alternative form just to get it a few weeks early. Point being, the middleman is always going to get their piece of YOUR money. Patience is valuable.

Some companies are already suggesting that taking your refund on a prepaid debit card is a better option.  My question is this…better than what?  Loading YOUR money on to a prepaid debit card that is going to “fee” you to death is not a better option.  It’s a horrible option. But still, they’ll try to scare you with visions of “long lines” at the evil check cashing locations. Really, when was the last time you saw a “long line” at a check cashing location?  I drive by them all the time and there’s never a car in the parking lot.

Stop believing the hype from people and companies that profit from your fear of being “banked.”  Open a simple savings account at a bank (big or small) or a credit union. Get your tax refund direct deposited to that account and you’ll pay the grand total of $0 for the transaction.  And, again, you won’t have to wait in the mythical “long lines” at the check cashing location.

Just as easy, have your refund sent to you in check form.  Then deposit that check, again, in your bank account.  You can even use the drive through so you don’t have to get out of your car and possibly, oh no, wait in the “long line” inside your bank branch.

As long as you choose to live off the grid without traditional banking services you’re going to pay more to receive and send money.  It’s that simple. They’ll try to convince you the their fees are less expensive than those you’d pay to a bank. If this wasn’t a family friendly blog I’d tell you exactly what I think of that.

Be smart, people.

JRU on 60 Mins SetCredit Reporting Expert, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.