Avoid the instant gratification of refund anticipation loans
Posted
Mar 07 2008, 07:20 PM
by
Karen Datko
How does Patrick at Cash Money Life really feel about tax refund anticipation loans? He writes, "The refund anticipation loan is quite possibly one of the worst things to happen to taxes since ... well, taxes."
First of all, why not wait the 10 to 14 days it will take the IRS to get your money to you electronically. "Unfortunately, some people aren't satisfied with mere days. They want it now!" Patrick says. "Enter the refund anticipation loan," which he calls "essentially payday loans that are guaranteed by your tax refund."
Second of all, why pay the tax-preparation company extra money when you can get your money back from the government for free. (And Patrick reminds you that the refund is your money. "You just gave too much to Uncle Sam and he was nice enough to hold it for you in an interest-bearing account where it would earn interest ... for the government," he says.)
Refund anticipation loans come with plenty of fees, including loan application charges, finance charges, rush charges and other fees, Patrick says. You can end up paying more than $50 just for the convenience of having a $200 refund in your hands in a day or two.
