Did you hear that? The quiet rumbling of printers rolling out W2 and 1099 forms? The sound of H&R Block shops opening up around the country? The shrill grind of thousands of accountants sharpening their pencils? Yes, tax season is definitely approaching.
On CreditBloggers.com, we’ll be providing you with the occasional tax tip from now through the dreaded April 15th deadline. Today, let’s start by talking about the heavily advertised and criticized "refund anticipation loan" programs.
A few years ago, refund anticipation loans suddenly became the greatest thing to happen to tax preparers since paper clips. These loans allow consumers to receive their tax refund instantly instead of having to wait a few days or weeks. The catch, there are high fees and interest rates charged for these short term loans. When you do the math, the APR on refund anticipation loans can be as high as 500%. Read more about the rates and fees here.
Now, I don’t consider myself to be an extremely patient person, but the idea of paying around $200 to receive my refund a few days early just doesn’t make sense. Do yourself a favor this tax season: use the IRS e-file system (which delivers your return in just a few days instead of a few weeks) and skip the expensive refund anticipation loan.
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