Beware of Refund Anticipation Loans

Refund anticipation loans are commonly offered by tax preparation services across the country. Although this might seem like easy money at the time, there are some negative consequences that you will need to be aware of.

Refund Anticipation Loans

A refund anticipation loan allows you to get access to your tax refund before the federal government sends it to you. This is a very short-term loan that is offered by tax preparation companies. They will typically give you access to your money through a debit card of some sort. Then whenever your refund comes in from the federal government, the money will be directly transferred to the lender.

High Interest

The big problem with refund anticipation loans is the high interest rates. Most of the time, these interest rates are going to be exceptionally higher than anything else that you could find in the market. This means that unless you seriously need access to the money immediately, you should stay away from these loans.

Responsibility

You are also responsible for repaying the loan. This means that if for some reason you do not get your full refund, you will still have to repay the entire amount.

Alternatives

Instead of using a refund anticipation loan, you might want to consider looking at a personal loan from a bank or a peer-to-peer loan from a peer-to-peer lending site.