Where You Should Never Put Your Tax Refund


If you’re due a tax refund and don’t want to wait on the Internal Revenue Service to send it to you, you may have to pay a fee to get it sooner.

While money expert Clark Howard would prefer that you pay no fees to get your own money back, he wants to warn you about one especially egregious way that tax prep companies siphon money from your tax return: gift cards and prepaid debit cards.

Do Not Put Your Tax Refund on a Gift Card or Prepaid Debit Card

TurboTax and several smaller tax prep companies offer to put your refund on a prepaid debit card.

H&R Block is even offering to put your refund on an Amazon gift card — along with a 3.5% bonus.

These offers can be enticing, but Clark says you shouldn’t fall for them — no matter how sweet the deal may seem.

“They’ll tell you all kinds of tall tales about how it’s the greatest thing ever to get your refund on one of these cards,” Clark says on his podcast.

“What they won’t tell you — at least not in large print — is that you will be subject to a lot of junk fees.”

As consumer site Lifehacker notes, many of these cards come with extra charges from monthly fees to per-transaction fees.

“Fee on top of fee on top of fee,” Clark says, “and it’s just terrible how you get ripped off.”

As for a tax refund tied to a particular retailer’s gift card, Clark says: “Could there be a worse idea?”


Here are two of Clark’s biggest issues with gift cards:

  • They turn real money that can be used anywhere into what he calls “fake money” because there are conditions and restrictions on using it.
  • There are too many gift card scams going around these days.

Clark: Here’s the Best Things To Do With Your Tax Refund

Clark says you should get your tax refund in your hands the cheapest way possible (and free is the cost from the IRS), but then what should you do with that money?

1. Pay Down Debt

A tax refund may be just the boost you need to make some serious headway toward getting caught up on bills and paying down debt.

2. Open a Roth IRA

If you’re not in debt, consider opening a Roth IRA, which is a retirement account that allows you to deposit post-tax money and withdraw it later tax-free.

Final Thought

Clark says you shouldn’t actually want to get a tax refund: That’s just lending your money to the federal government for free. Here’s how to bring your refund as close to zero as possible.

But if you do get one, see it as an opportunity to do something smart with your money.

“Neither of those [paying off debt or funding a Roth IRA] are about spending,” Clark says. “They are both about improving your financial outlook.”

More Tax Resources From Clark.com:

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