The federal government is trying a new program to get tax refunds doled out quicker to those who don’t have bank accounts. The new program will test out the idea of issuing refunds on debit cards with hopes of deterring people from using Refund Anticipation Loans, which can be extremely expensive short-term loans. According to a news release from the Treasury Department, the government will send out 600,000 letters to low and moderate income people by the end of the month asking whether they want to participate in this pilot program.

The program is focused on those who don’t have bank accounts and who may be more likely to use check-cashing services or payday lending. “This pilot program will provide low- and moderate-income Americans with a low-cost option for faster delivery of their federal tax refund,” said Deputy Secretary of the Treasury Neal Wolin in a news release. “This innovative card can be used for everyday financial transactions, such as receiving wages by direct deposit, withdrawing cash, making purchases, paying bills and building savings safely and conveniently, giving users more control over their financial futures.”

According to the Columbus Post Dispatch, last year the Treasury Department spent $40 million mailing 45 million paper refund checks. If those checks would have been issued electronically the government could have saved a lot of money. Roughly 63% of taxpayers do get their refunds electronically now. It’s safer because paper checks can sometimes be lost or stolen. And for those who don’t have bank accounts there is a fee to cash them. According to the Treasury Department,  more than 1.7 million workers around the country use payroll cards to receive and access their wages, often because they do not have bank accounts.

The Treasury Department says the tax refund debit card has many free services including free point-of-sale transactions, free online bill pay, free ATM cash withdrawals at more than 15,000 locations and free cash back at participating retailers. In addition to getting their tax refund on the card, people will also be able to use the card to receive their work paychecks through direct deposit. The only way to get the card is if you are one of the 600,000 people who receives a letter from the Treasury Department.

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