The U.S. Treasury said on Thursday it is launching a pilot program to deliver income tax refunds on debit cards for low- and moderate-income people who do not have traditional bank accounts.

The Visa prepaid debit cards are designed to allow these taxpayers to receive their refunds much faster than with a paper check and avoid high fees for cashing those checks at currency exchanges or payday loan stores.

“This pilot program will provide low- and moderate-income Americans with a low-cost option for faster delivery of their federal tax refund,” said Deputy Treasury Secretary Neal Wolin.

The card can be used in everyday financial transactions, such as receiving wages by direct deposit, withdrawing cash, making purchases, paying bills and building up savings.

The Treasury said it will mail letters next week to 600,000 low- and moderate-income individuals in the United States. The letters will invite these taxpayers to consider activating a MyAccountCard Visa prepaid debit card in time to have their 2010 federal tax refund directly deposited onto the card.

It also is encouraging existing payroll card users to have their tax refunds directly deposited onto their cards. More than 1.7 million workers use payroll cards to receive and access their wages because they do not have bank accounts.

The Visa-branded MyAccountCard will be issued by Provo, Utah-based Bonneville Bank, acting as the Treasury’s financial agent. The Treasury said the card will offer holders a number of free services to limit the costs of using it, including free cash withdrawals at more than 15,000 automated teller machines nationwide.