Anticipation Refund Loans - The ugly Informative - The Truth

Review by GothicSmurf on 2008-02-07
With tax time coming up I found this very interesting as it's something I've thought about in the past.

"The Consumer Federation of America says the effective annual percentage rate for most RALs ranges from 50 percent to nearly 500 percent. Include the application fees in that calculation – anywhere from $60 to about $135 – and those APRs are from 80 percent to nearly 1,200 percent!"

Later in the article it talks about RAL's could be considered tax fraud!

And what you're doing is paying someone else so you can use your money. Would you pay your bank an extra $30 to use what is already yours?

Read more here:

In a hurry to get your refund? Beware
Comments:13 Replies - Latest reply on 2008-03-21
Posted by S. on 2008-02-07:
It's kind of like an NSF or overdraft fee but in reverse order, isn't it?
Posted by FoggyOne on 2008-02-07:
Very unfortunately that this affects those who need the money most.
Posted by Anonymous on 2008-02-07:
Again another excellent read courtesy of GothicSmurf! Thanks!

The real problem is people who barely live from payday to payday ending the tax year with the IRS owing them a big chunk of money. It blows my little mind when I hear people getting refunds over 5K and they rationalize it by saying its a good way to save money... A tax refund is nothing more than an interest free savings account. And the irony is these same people then pay extraordinary finance charge for their 'rapid refund'. Insanity.
Posted by GothicSmurf on 2008-02-07:
Stew- BA.
Posted by Principissa on 2008-02-07:
I agree with Stew. I also feel horrible for the people who have to get one of these loans in order to get their money. This is worse than one of those pay day loan places. Yet another awesome review Gothic.
Posted by jenjenn on 2008-02-07:
This is insane! Thanks for the info. I've never done this before, but I did e-file with H&R Block last year (which I will NEVER do again, but that's another story) and they charge you $10 to direct deposit. I didn't realize that until after the fact when I had to pay the bill, but I sure know better now to ask ahead of time.
Posted by Anonymous on 2008-02-07:
Good info Gothic. I try to keep it at even during the year, so at tax time I either owe a little or have a small refund due. (VH)
Posted by MRM on 2008-02-07:
Turbotax.com does not charge for direct deposit.
Posted by CrazyRedHead on 2008-02-07:
Nor does taxact.com. I will never do a refund anticipation loan. About 5 years ago, I was expecting a large refund and did one of those RAL things. Little did I know but the State of South Carolina went in and took the entire refund for my husbands back child support, without even telling us. I got the loan but later found out that I had to pay back the $500.00, which was already gone. I have since gotten the number to check to see if there will be any tax offsets, and check before filing. I didn't find out about this until it was too late, and no one suggested the injured spouse until the next tax season. I didn't pursue this cause it allowed my hubby to get his drivers license, and to quit driving around uninsured and unlicensed, and ultimately was a good thing, although I had plans for that money and was disappointed.
Posted by CrazyRedHead on 2008-02-07:
Anyways, I did my taxes through Taxact and got my refund in 10 days, and it only cost me about $20.00, with no fee for direct deposit. The only reasons that I can see that anyone would need there refund immediately is foreclosure, no food, eviction, loss of utilities, jail, or other unforeseen (true) emergency. Wanting a big screen TV for the Sunday game is not an emergency, LOL. Although the waiting is hard, it is more cost efficient than spending $300.00-$500.00 to get it in a day or two. My hubby and I worked hard for that money, I am not paying someone that amount to do something that I can do for myself.
Posted by Anonymous on 2008-02-08:
GS, I found this very helpful, thank you.
Posted by ejack053824 on 2008-02-22:
Excellent post!
Posted by I Sue Ewe on 2008-03-21:
Now I know that certain states have mandated truth in lending information be clearly stated when consumers use those payday advance places which target people who live paycheck to paycheck. I would be curious to see if any have suffered or if people who need to continue to take financing at APRs or 150%.

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