(AP) - Some taxpayers are so anxious to get their income
tax refunds that they wind up paying an unnecessarily high price to
get their money.
While the popularity of Refund Anticipation Loans has dropped in
recent years, millions of people are still getting them.
The fact is, consumers are well advised to be patient and wait
for their money, rather than pay the high rates of interest and
fees associated with these loans.
According to the Consumer Federation of America, the effective
annual interest rate for a Refund Anticipation Loan can range from
50 percent to nearly 500 percent, when fees are included. Those are
rates that would make the mob envious.
And they are often provided by otherwise legitimate firms.
For most taxpayers, collecting their refund requires two simple
steps. One is to file electronically, and the other is to have the
refund sent through direct deposit directly to their bank. In many
cases, such a refund can be turned around in as little as 8 to 15
days. Ironically, that's typically the length of time it takes with
a costly Refund Anticipation Loan.