So you’ve done your homework this year. You made a commitment last April to keep all your documents organized and ready for tax season. January came and before making a decision, you explored all the different ways to file your taxes and selected the one that fits you best.

Now what? Now you can sit back while the IRS does its job, wait for your refund and get paid… right? Not quite. While this is the fun part, there are still some things to consider when receiving a tax refund.

Let’s rewind a bit. I know it’s exciting to hear that you are receiving a tax refund. But keep in mind that, for the most part, a refund indicates a misestimate and overpayment of taxes owed during the year. So when you get that large refund this year, consider that you have actually given the government an interest free loan and they are finally giving it back to you.

That said, when exploring different ways to receive your refund, your main goal should always be to keep more of your money where it belongs, in your pocket.

There are different options available for receiving your individual income tax refund. Today, I will discuss the three best ways to receive your tax refund: direct deposit, prepaid debit card and paper check.

1. Direct deposit. Direct deposit is the most popular way to get a federal tax refund. According to the IRS, in the 2013 tax filing season, almost 84 million taxpayers chose direct deposit. It’s not only secure and easy, but when combined with e-file, it’s the fastest way to get your refund.

Direct deposit also allows you to split your refund among up to three accounts on form 8888 and you can even make a contribution to your retirement account. Just make sure the accounts are in your own name, your spouse’s name or both — if it’s a joint return — to prevent your refund from being returned.

Sounds like a no brainer, doesn’t it? But what if you don’t have a bank account? Then this next option might be for you…

2. Prepaid debit card. There is a large number of taxpayers that are financially underserved in the United States, meaning they don’t have access to a traditional bank account. Which is why most tax preparers are now offering prepaid debit cards as a way to receive your refund.

There are a few things to keep in mind when choosing this method. First, make sure it’s a reloadable card so that you can enjoy the convenience and security of having your paycheck direct deposited on the card as well.

Second, watch out for fees. The biggest drawback to receiving your refund on a prepaid card is the countless fees that could possibly come with the card. Make sure you choose a card that has no enrollment fee, low or no monthly maintenance fee and low ATM withdrawal fees.

3. Paper check. The traditional way of receiving tax refunds is by paper check. The downside to this option is the risk of your check getting lost in the mail or stolen. I don’t know what it is about receiving and holding the actual check in your hands, but for some reason, this is still the preferred method for many taxpayers.

If you choose to receive your refund by check, make sure you choose an option that issues the check on nationally recognized check stock. By doing this, you can walk into any major bank nationwide and cash your check for a low flat fee or even for free in some states. No need to pay excessive fees at check cashing places to get your refund money.

Knowing all your options will give you the foundation you need to make informed decisions. (Tweet this story)

Daphne Veras is the community director at, a national provider of affordable financial products and services tailored to meet the unique needs of the financially underserved.  After expanding her career in retail banking for 6+ years, she decided to join the Refundo team and combine her banking and marketing capabilities. At Refundo, Daphne and the team hope to help solve real-world problems with technology. They recently introduced a revolutionary mobile banking solution that combines “local community bank service” with “awesome” technology. 

More from