H&R Block to Offer Bank Accounts

Here's some money and tax news hot off the press this morning -- H&R Block, the tax company, is offering a variety of new services to its customers including free bank accounts. Here are the details:

The company, based in Kansas City, Mo., planned to announce at its annual meeting Thursday it will begin offering bank accounts to customers who need them so they can take advantage of direct deposit of their tax refunds.

The H&R Block Emerald Account will be linked to a prepaid bank card so that account holders can access their money easily via automated teller machines, or ATMs. The company also was announcing creation of high-yielding savings accounts and Individual Retirement Accounts; reduced fees in its refund-anticipation loan program; and improvements in its education and advice reports.

So, is this really a need? Do people not have bank accounts? I guess so:

H&R Block estimates some 3 million of its clients do not currently have bank accounts, forcing them to pay high fees for check-cashing services and to make do without formal savings accounts.

Not to mention -- they have to wait longer to get their tax refunds. If you can direct deposit it into a bank account, you will get your tax refund much faster than any other way of receiving it.

Seems like a good deal for people who currently don't have bank accounts. But there's a part of this new plan I can not recommend:

Among the changes will be lower cost refund anticipation loans, Ernst said. With refund anticipation loans, customers who have their taxes prepared by H&R Block are offered their refunds immediately in return for a fee.

First of all, people shouldn't be getting a very big tax refund at all. Second, they shouldn't be so desperate (or impatient) to pay the equivalent of 36% annual interest to get their refunds now instead of waiting a couple weeks. Sheeeesh!

Overall, though, I'd say this is a net win for consumers/taxpayers. It helps people who don't have bank accounts get one, it speeds the time between filing and the refund being received, it saves people money in reduced ATM fees (which can be a killer, by the way), and, for those who HAVE to have a refund in two hours versus two weeks, it will save them money as well.

Comments

[Duane Gran]

I suspect that direct deposit has eaten into their rapid refund promotion, which was always a means of offering a high interest loan to their clients.

[jldude]

First off, I've never used H&R Block, but based on the headlines I've been reading, I don't think I ever will.

google "h&r block complaints" and click on the consumeraffairs.com stories and you'll see what I mean.

Just two of the highlights (marketing fraud and f'ing up their own taxes) http://www.consumeraffairs.com/news04/2006/03/ny_hrblock_ira.html http://www.consumeraffairs.com/news04/2006/02/hr_block_mistake.html

I just don't trust the company.