Released: February 13, 2007

Financial firms lure tax refunds

Source: Kathy Chu, USA Today

Financial firms are stepping up their efforts to capture money from tax refunds, hoping to capitalize on a new option that lets you have the IRS directly deposit your refund in up to three accounts.

Citibank, Wells Fargo and Countrywide Bank, among others, are urging taxpayers to take advantage of the change this year to deposit at least part of their refund into a savings or individual retirement account.

The advice to save — rather than spend — your tax refund isn’t new. But the firms hope for a warmer reception from investors this year because of the policy change. Previously, taxpayers could have their refunds directly deposited into only one account.

Because of that limitation, “People would put their tax refund into their checking account, and they may or may not have saved that,” says Jeff Pearlberg of Citibank. “When you’re allowed to do a split refund, what you’re doing is telling people to pick a savings account.”

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