Bankruptcy

Why Should Consumers Not Use Refund Anticipation Loans?

By Karen Oakes, Southern Oregon Bankruptcy Attorney

We are a modern society…we want it now, we want it quick, we don’t like to wait.   Tax preparers know this.   Over the years, some tax preparation agencies have offered a refund anticipation loan (RAL) or to put a consumer’s refund on a plastic card that is similar to a debit card.  The fees for preparing the tax return can be paid with that RAL or deducted from the plastic card — no money out of pocket for the unwary taxpayer.   Why would this be a bad idea?

When a taxpayer gets their refund the same day through a refund anticipation loan (RAL), it is a LOAN.   And that loan has a horrible interest rate.  The Massuchesutts Division of Banks  recently issued a press release that warned against all high interest RALs and another consumer advocate, Mark Huffman, from www.consumeraffairs.com published a video on youtube.com, warning consumers about the high interest rate on these loans.  Taxpayer Beware!!!  Read the fine print and wait just 14 days for your tax refund to be deposited into your own bank account. 

Stay tuned:  it gets worse!!!   Why Should Consumers Not Have Their Refunds Credited Onto Prepaid Charge Cards Issued By The Tax Preparer?

Full post as published by Bankruptcy Law Network on February 27, 2010 (boomark / email).