Millions of Americans don’t have access to banking services. The exact numbers are tough to pin down but a 2013 Federal Deposit Insurance Corporation (FDIC) National Survey of Unbanked and Underbanked Households suggests that 7.7% of all households in the country (9.6 million households representing 25 million people) are unbanked while an additional 20.0% (24 million households representing 68 million people) are considered underbanked. Households which are considered unbanked do not have a bank account or access to bank services; households which are considered underbanked are those that may have a bank account but rely on alternative financial services like check-cashing companies for banking services.
The most popular reason for being unbanked or underbanked? Having insufficient money to open or maintain an account. Of those households that recently identified in the FDIC survey as unbanked or underbanked, more than a third had experienced a significant income loss or job loss.
At tax time, the unbanked and underbanked may turn to arrangements considered to be predatory (like high-interest loans) in order to take cash tax refund checks. Others may turn to refund anticipation-type loans (more on those later in the season) to help bridge the gap while they wait for tax refund checks to arrive: without a bank account, taxpayers must rely on a paper check instead of direct deposit, which slows refunds.
Tax and financial service companies are trying to fill the void by offering alternatives. The nation’s second-largest tax preparer, Jackson Hewitt Tax Service, is one of them. This year, taxpayers who have their taxes prepared at Jackson Hewitt can opt to have their federal tax refund added to an American Express Serve account. American Express Serve is a reloadable prepaid account backed by American Express.
With an American Express Serve Account, taxpayers can access their tax refund up to two days faster than a standard electronic deposit from the Internal Revenue Service (IRS). What’s the reason for the extra day or so? American Express (Amex) will add money to a Serve prepaid Account upon notification of a pending refund deposit, as compared to the typical bank process of making money available only after it has actually been received.
“We are innovating the tax refund, which is the biggest check of the year for millions of the hardest-working Americans,” said David Prokupek, CEO of Jackson Hewitt. “With American Express Serve, we can get refunds to our clients faster and with fewer fees, and offer smart ways to make their tax refund work harder for them, especially those living outside of the traditional banking system.”
Noting that half of Jackson Hewitt locations are located in Walmart stores, Prokupek knows that “our client is a Walmart shopper” adding that “demographics run the gamut from millennials to single moms to retirees.” What these clients have in common is that their tax refund may be the biggest financial transaction they’ll face this year. With the Jackson Hewitt/American Express collaboration, taxpayers can use their tax refund as an introduction to Amex services, an opportunity that might not normally be available.
The Serve account offers other card membership benefits including travel benefits and Amex offers on items like gas and groceries, as well as fraud protection features. Also appealing for those who might be struggling to make ends meet? There is no credit check and no minimum balance. The Account offers tools to track and categorize spending, establish monthly budgets by category, and set aside money for future purchases.
There is a monthly fee of $3.00 to use the card. Additional fees may apply to ATM withdrawals and other services. And of course, additional terms and conditions apply. Always (always) read the fine print when you sign up for any sort of financial service. I haven’t personally checked out the Account so I would encourage you to do your homework. For more information about American Express Serve, visit https://serve.com/jacksonhewitt/.
