Story source: Brenda Procter, M.S., State Specialist & Instructor, Personal Financial Planning, University of Missouri Extension
The ball at Times Square had barely touched bottom before the ads for tax-refund loans began broadcasting across the country. But getting tax refund money just a few days earlier can cost you.
A refund anticipation loan (RAL) is a short-term consumer loan secured by the borrower’s expected tax refund. Some tax preparers may advertise RALs as “instant refunds.” This is both misleading and illegal, said Brenda Procter, personal financial planning specialist for University of Missouri Extension.
Consumers are not getting their tax refund, she said. They’re taking out a high-interest loan.
While you may be tempted to pay the lending fees to get your refund right away, Procter says a little patience can save you a lot of money.
“A lot of taxpayers don’t realize that if they file their income tax electronically and arrange to have their refund deposited directly into a checking account, they will likely have their refund in a week to 10 days anyway,” she says.
Borrowing your own money comes at a steep price…
To learn more about the interest, fees and other charges from RALs and to find out where you can go for FREE tax preparation services, see the full version of this article (along with the accompanying video) at http://missourifamilies.org/