H&R Block to offer bank accounts

updated 8:05 a.m. ET Sept. 7, 2006

NEW YORK - H&R Block Inc., best known for its tax preparation services, is expanding into banking.

The company, based in Kansas City, Mo., planned to announce at its annual meeting Thursday it will begin offering bank accounts to customers who need them so they can take advantage of direct deposit of their tax refunds.

The H&R Block Emerald Account will be linked to a prepaid bank card so that account holders can access their money easily via automated teller machines, or ATMs.   The company also was announcing creation of high-yielding savings accounts and Individual Retirement Accounts; reduced fees in its refund-anticipation loan program; and improvements in its education and advice reports.

“We think the things we are doing will solve a whole host of the problems our clients face,” H&R Block chairman and chief executive, Mark A. Ernst, told The Associated Press in an interview.

H&R Block estimates some 3 million of its clients do not currently have bank accounts, forcing them to pay high fees for check-cashing services and to make do without formal savings accounts.

Ernst said the company hoped to open at least 1 million bank accounts for its clients in next year’s tax season.

He said many of the innovations are possible because H&R Block obtained its own thrift charter and opened a savings bank in May. That will make the new accounts eligible for coverage by the Federal Deposit Insurance Corp., which insures traditional checking and savings accounts for up to $100,000.

He said H&R Block also has a new agreement with the London-based HSBC banking group, which processes refund anticipation loans for the company.

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