Don’t Get A Refund Anticipation Loan

Tax time is coming up and the National Consumers League is busy wildly flapping its arms to try to warn you off applying for a Refund Anticipation Loan this year.

In 2004, over 12 million Americans applied for an RAL, spending over $1.6 billion just so they could get their refund two weeks earlier. The interest rates on RALs are truly shocking: from 40% to 700%(!).

The usual common sense advice applies: if you need your refund as speedily as possible, e-file and get it direct deposited into your bank. Small comfort when a bookie’s threatening to shatter your kneecaps, but the IRS certainly screws us over enough without tipping them 700% interest on the obligatory reaming.

Consumer Group to Taxpayers: Don’t Borrow Your Own Money [Consumer Affairs]


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  1. airship says:

    The best advice: adjust your deductions so your refund next year is minimized. Don’t let the government use YOUR money all year interest-free. Of course, most low-income Americans treat the income tax refund as their only savings plan. But rich people NEVER get a refund. They know that owing taxes in April is the cheapest loan they can get.