H&R Block Announces New Programs

According to a recent press release, H&R Block introduced plans to help customers open bank accounts to receive their refunds, cut the cost of refund loans, and also to expand educational programs. Here’s what they have to say about their new bank accounts, which are intended to assist customers that don’t have accounts of their own:

Accessed with the new H&R Block Emerald Pre-paid Card, this next generation bank account will be opened for free and features easy account access, no overdraft fees, no minimum balance requirement, no transaction fees for purchases, FDIC insurance, and convenient monthly statements. In addition, the bank card provides a way to avoid high check-cashing fees for the nearly 3 million H&R Block clients who do not have a bank account. The card account can also accept payroll and other deposits at thousands of retail locations nationwide.

They’re also planning a high-yield savings option that will offer an extremely competitive 5.25% APY:

In addition to its low-cost banking solution, H&R Block announced two new savings accounts that will enable its clients to turn their tax refunds into savings. At 5.25 percent annual percentage yield (APY), H&R Block’s new Easy Savings Account and Easy IRA offer among the highest rates of return in the country for FDIC-insured deposits.

The Easy Savings Account, designed as a basic emergency fund, offers convenient access at ATMs. The Easy IRA enables clients to save for retirement using a tax-advantaged account that makes it simple to claim the Retirement Saver’s Credit, a federal matching incentive for low- and moderate-income savers.

Both accounts have no minimum balance requirement and no opening or annual account maintenance fees for H&R Block’s retail tax clients. The annual fee is also waived for non-H&R Block clients who maintain a $300 minimum balance.

As far as the lower cost refund loans go, here’s what they have to say:

For a $2,800 refund anticipation loan, which is the average loan size for H&R Block, the cost could be reduced more than 40 percent compared to last year. This same $2,800 refund loan can cost as little as $60, including a finance charge of less than 1.1 percent, when the loan is combined with a bank account. As an 11-day loan, the finance charge on this $2,800 loan translates to a 36 percent APR, which meets benchmarks suggested by many consumer advocates.

I’m not a big fan of paying interest for anything, and 36% is a pretty shocking number. I do, however, realize that short-term loans such as this can be a useful tool for someone in a pinch, so at least the costs are moving in the right direction.

Finally, they also announced that they’re planning to expand their financial education and advice programs by expanding their “H&R Block Advantage Report,” which offers tax tips, budgeting, borrowing and savings information, alerts to government benefits, and so-called “action plans” for their clients.