Bank’s, Cards, & Credit Unions that offer customers early Direct Deposits on Tax Refunds?

Early Direct Deposit Accounts

Direct deposit is the “fastest, safest way to receive your tax refund,” According to the IRS.  

There are several advantages to direct deposit of a tax refund:

• You can get your refund much faster, typically in about 8 to 10 days;
• More secure than getting a check in the mail (thousands of refund checks are returned to the IRS each year);
• For those without bank accounts, direct deposit avoids expensive check cashing fees; and
• You can get access to your refund faster than waiting for a check to clear.

So what exactly happens when you transfer money?

• Your originating bank sends transactions in batches during the day to an automated clearinghouse.
• The automated clearinghouse sorts the transactions and the moves them on to the receiving bank, usually in a few hours.
• In many cases the receiving bank will have the funds the same day. Depending on when the transactions are sent in a batch, the funds may not be available until the next day.

There is an association for these automated clearinghouses that sets rules for transfers, called Nacha. Their rules say that money transferred on one day, should be available by the end of the following day. So if you send money on Monday, it should be available by the end of Tuesday.

Prepaid Cards

Many have refunds direct deposited to a checking account or savings account. For those without a bank account, however, a prepaid debit card is a good alternative. While most prepaid cards offer direct deposit of government checks, some make it easier to set up than others.  

In addition, some prepaid cards offer bonuses when you deposit your tax refund on the card. With that in mind, the list below favors those prepaid cards that provide excellent instructions on how to set up the direct deposit of the refund and that offer tax refund bonuses.

Traditional Banks & Credit Unions

Some banks are slowing down the process on fund transfers in order to ensure there isn’t fraud happening when the transfer is made. Others, however, have suggested that the time the funds are held overnight allow the banks to invest your money and keep that unearned profit. This could also be a reason why the process won’t be speeding up anytime soon – the banks don’t want to give up that profit center.

Most Banks & Credit Unions use the Three Day Good Funds Model

The problem is that the wait doesn’t always end there. The receiving banks often take 2-4 days for funds to be released to customers because they are following what they call the “”three-day good funds model”, which basically means they’ll hold the funds for three days to make sure it’s not a fraudulent transaction.

Have a Bank, Credit Union or Prepaid Card that is not listed let us know in the comments below and we will add it to the list.