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Rapid Refunds - Are They Really Worth It? |
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During tax season, there is much talk of rapid refunds. Such refunds are indeed rapid, putting money in your hands almost instantly. But they come with some undesirable results as well. This article will present all the details of rapid refunds so that you can make an informed decision. During tax season, there is much talk of rapid refunds. Such refunds are indeed rapid, putting money in your hands almost instantly. But they come with some undesirable results as well. This article will present all the details of rapid refunds so that you can make an informed decision. What is a rapid refund? Rapid refunds, according to the commercials, are the way to go if you want to receive your tax refund on the spot for a small fee. It would be nice and all, but why would you need the money that fast? Depending on the circumstances, some families live from paycheck to paycheck. At tax time, the big bolus of cash is a welcome sight when there are bills to pay and mouths to feed. Well known tax centers like Jackson-Hewitt or H&R Block can file your tax forms and sign you up for the rapid refund program. Although it seems so easy on the surface, rapid refunds are more complicated than that. In reality, they are refund anticipation loans, abbreviated RAL's. Just all loans, they bring with them interest and finance charges. We've heard of refund anticipation loans as well. Most people hear those words and they think, "No, I don't want to take on a loan." But if they hear "rapid refund", they are on board. The reason is that people don't equate a refund with a loan. In our minds, one is better than the other. The reason for the name change is that people felt defrauded by the advertising. If they had known it was a loan, they would not have taken advantage of the offer. At the onset, the interest rate charged for one of these loans was staggering. To make matters worse, the people who seemed to be targeted were low income earners receiving the earned income tax credit (EITC). A family who really needed their tax refund right away was able to get it as a result of the rapid refund program. But, if the person applying for the rapid refund was not aware of the high charges they would be charged on the loan, and even if they paid as soon as possible, the extra they had to pay because of interest on their refund of a few thousand dollars was astronomical. What was a little known fact is that electronic filing can have a refund in the hand of the taxpayer in two weeks. To me, that's fast. I'm used to waiting for months to see my refund. If you don't have a computer, a tax preparer can file it for you with the IRS website. Those without a bank account can still file electronically and have a check mailed. The refund will return faster than the paper filing method. Credit unions are also an option for direct deposit in lieu of a bank. Credit unions require as little as $25 in share accounts to keep them open. These types of accounts are available through many workplaces, church affiliations, and other organizations. There are more palatable options for receiving a quick refund other than taking out a refund anticipation loan. Consider all of them before signing on the dotted line. About the Author: Most debt consolidation loans are based on your home equity, but what about non homeowner debt consolidation? Learn more about your consolidation choices on the Inside Debt Consolidation website, where you can sign up for our free 5 day e-course that will help you choose the best consolidation option for you. |
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