Shame on you, South Carolina. Your citizens deserve better. Better than the pact you made with Bank of America. And better than your representation of the deal, which wrongfully paints it as a major benefit to taxpayers.
Here are the facts: the state of South Carolina reached an agreement with Bank of America to distribute prepaid debit cards instead of checks or direct deposits. Consumers wanting to avoid receiving a prepaid card will have to indicate on their tax return that they prefer a check or direct deposit. Otherwise, they will be sent a card for the excess of withheld 2011 taxes, an amount which on average exceeds $800 on average.
“Wait, what’s the problem?” you ask. “I love those things. They’re like using a debit card—heck, you can even use ‘em at the ATM to withdraw the money.” And it’s true, there are certain pros to the partnership. Receiving a debit card instead of a check avoids check cashing fees for taxpayers without a bank account—well, unless you count the $10 you have to pay each time you make a withdrawal (after your first). Many ATMs only allow a withdrawal of a few hundred dollars, meaning for some there is no way to withdraw the entire amount without incurring the $10 fee a few times. Still sound handy?
Oh, there are more “benefits.” The state reports it will save close to $1 million on the agreement, which is great… until you compare it to the disservice to its citizens. The $1 million “savings” is everything but—it’s just part of the money going to Bank of America in ATM fees, withdrawal fees, and the spare change that will inevitably be left on each card. (Have you ever used the entirety of an $850 gift card, down to the penny? Me neither.)
So citizens of South Carolina—and the other states that have negotiated similar agreements—beware. Bank of America is up to its usual tricks, this time trying to grab fees out of withheld taxes, of all things. No wonder BoA rakes in$1.5 billion annually in fee income. And this time your state government is complicit. They’re not only partnered with the banking giant, the SC Department of Revenue’s website trumpets the “Convenience and Flexibility for Taxpayers.”
Maybe for some. Like, those with less than $400 in tax refund, who don’t have a bank, who live within a few miles of a Bank of America ATM (oh, did we forget to mention, you get charged $2.50 at other ATMs?). It is starting to sound like very few people “benefit,” especially compared to those South Carolina residents that Bank of America gouges simply for failing to read the fine print about opting out of the debit card refund.
Consider yourself warned.