Beware Refund Anticipation Loans

In the next few months you’ll probably get your tax done and one of the things that might tempt you is something called a refund anticipation loan. It’s so simple, you do your taxes, the preparer looks at your return, and offers you a loan in return for a signature. There’s no waiting period, few checks (the return is practically guaranteed), and all you really have to give up is a little bit of a fee for the paperwork and you’re walking out with money.

Beware these refund loans. Be wary of them because they generally carry exorbitant interest rates and you get the funds only slightly faster than if you were to file the claim and wait. That’s right, when you file your claim, you can generally get the funds deposited into a bank account in a matter of a couple weeks. E-file today, request the amount be deposited into a bank account, and within a few weeks you will see the funds appear.

Here’s an article last year on Bankrate that discusses these loans and how bad they are for you.