PEWAUKEE, Wis., Feb. 26 /PRNewswire/ — Wisconsin credit unions — not-for-profit financial institutions owned by their members — hope more Wisconsin taxpayers will get a free tax refund this year instead of paying the high costs associated with rapid refund loans. To get the word out, the trade association — The Wisconsin Credit Union League — has launched a new website and public service announcement that walks consumers through the process.
“Simply use the credit union account you already have — or open one — to get your tax refund fast and free with direct deposit,” the spot advises. “If you need help filing, free help is also available. For more information, visit freetaxrefund.org.”
Two million Wisconsinites have an account at a credit union they could use for direct deposit.
Free filing assistance for low-income filers is available from trained volunteers at volunteer return preparation sites statewide, operated in partnership with the IRS, Wisconsin Dept. of Revenue and AARP. Credit unions are volunteering at the sites to prepare and file tax forms and open deposit accounts to facilitate direct deposit. Credit unions hope more people will use direct deposit for a fast, free turnaround on their refund instead of high- cost “refund anticipation loans” offered by many paid preparation firms during tax time.
“In 2004 alone, refund anticipation loans drained Wisconsin tax filers’ wallets of $32.5 million,” says Brett A. Thompson, President & CEO of The Wisconsin Credit Union League. “That cost was completely unnecessary. All you need to do when filing is use an institution routing number and a specific account number to get your tax refund in just days, absolutely free.”
“Our website also urges consumers to save some of their refund for a rainy day by using an additional account where the funds can be tucked away,” Thompson adds. “Tax time is a great time to begin saving because direct deposit makes it so easy — even in small amounts.”
Direct deposit can route funds to as many as three different accounts.
Thompson says refund anticipation loans — which can siphon hundreds of dollars in fees from a refund — are typical of predatory financial services that may sound like a good deal to people in need of fast cash but often leave the low-income people who use them even more strapped for cash later on.
“It’s a cycle of dependency we’re working hard to break,” he says.
Through their REAL Solutions initiative, which captured a 2006 Governor’s Award, credit unions are not only fighting RALs but developing other less costly options to improve consumers’ financial position over time.
For example, credit unions will make short-term loans to their members for just a few hundred dollars, reducing their need to use high-cost payday lenders. Other loan programs may require borrowers to save a portion of what’s been borrowed while others mandate financial counseling before additional loans can be granted.
Consumers can also use credit unions to cash government or payroll checks for half the cost — or less — of check cashing outlets. Similar cost savings is available on wire transfers — a frequent need of new Americans.
“While these services do not drive profits, credit unions offer them as part of their mission as cooperatives. The purpose of not-for-profit credit unions is to serve members, not make profits,” Thompson says.
“The aim is to move individuals through the steps that lead to a more solid financial footing: establish an account relationship with a mainstream financial institution, build creditworthiness with small, more affordable loans, and — over time — build wealth,” he adds.
The website – http://www.freetaxrefund.org/ – explains more and includes the audio files of the radio PSA, available as :15- and :30-second spots.