H&R Block Sees a $2.4 Billion Opportunity. What are Credit Unions Missing?

H&R Block’s recent decision to form a commercial bank can be a challenge or an opportunity for credit unions.

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Just over a week ago, H&R Block announced its plans to offer low-cost bank accounts.  The company outlined a plan at its annual shareholder meeting to turn its more than 12,500 offices and 19 million person customer base – a quarter of the credit union industry’s- into a thriving financial institution.  This action demonstrates the company’s understanding of the opportunities created by the tax season.  At a time when all Americans of working age calculate and evaluate their financial standings, there is a clear symmetry between tax preparation and financial products.  By combining the two, H&R Block anticipates attracting as much as $2.4 billion in deposits.

While the credit union industry struggles to attract deposits, this decision should send them a message.  Although there are some credit unions already taking steps to offer tax services, those that are not more involved in their members’ and potential members’ tax preparation are missing a significant opportunity.   Looking to what H&R Block plans to offer, the overlap with credit unions is clear. 

  • Low-cost Banking Solution: Targeting the un-banked or under-banked, the company will offer free accounts to clients that direct deposit their income tax refund.  The accounts will also offer bill pay, no overdraft fees, no minimum balance and be linked to a new Emerald pre-paid card.
  • High-Yield Savings:  Offering both a basic savings with a 5.25% APY and an IRA, they hope to meet the needs of higher income clients and retain much of the tax refunds.  This product will be especially attractive since there are no minimum balance requirements or maintenance fees for H&R Block tax clients and nominal amounts for non-clients.
  • Refund Lending:  After facing criticism for its high refund advance rates, it will now drop the cost by more than 40% from last year.  Consumer advocates viewed this decision as a welcome and needed shift for low and moderate income Americans.
  • Financial Education: H&R Block also plans to expand its financial education and advice program.  It will offer tax clients a free report with tax, budgeting, saving and borrowing tips.

Should this offering sound eerily familiar to credit unions?  It should.  Not only is H&R Block offering key financial products like a checking account or IRA, but it is also focusing on areas where credit unions seek to differentiate themselves – such as the underserved and financial education. 

This action can either be viewed as negative for credit unions due to increased competition OR a positive opportunity to use their standing as a trusted financial partner  to pro-actively tell members and potential members about products and services offered by the credit union to help with tax preparation and more.  

To learn how some credit unions are already turning the tax season into an opportunity for balance sheet growth, as well member growth and education, join us for our upcoming webinar, Using Tax Season to Build Lasting Relationships," brought to you by Callahan & Associates.






Sept. 18, 2006


  • We once partnered with H&R Block but after they refused to stop poaching our members and we found them literally gouging on instant refunds, we severed the relationship. It is hard for me to believe they will have their customers' interest(s) at heart or even in mind. I would counsel that a credit union should deal with them very carefully. their values are not ours.
  • This is a sobering development. For-profit financial institutions are wising up and treating their customers better. I worry that we credit unions are resting too easy thinking that for-profit firms won't ever care as much about the individual as we do--maybe they won't as sincerely, but they can certainly put on a game face and take at least some steps to treating people better. Developments like this can be motivating if we choose to respond by reevaluating and extending our value propositions.