Consumer Alert: Refund Anticipation Loans...Reward or Rip-Off?CHICAGO -- Most consumers anticipate tax time thanks to the often sizable refunds received. Before the money is in hand, it is already spent in their heads. Will it be used to pay off credit card bills? Take the family to Disney World? Fix the furnace? The options are endless, but Family Credit Counseling Credit counseling (known in the United Kingdom as debt counselling) is a process offering education to consumers about how to avoid incurring debts that cannot be repaid. This process is actually more debt counseling than a function of credit education. Service (FCCS FCCS Fundamental Critical Care Support FCCS Federal Claims Collection Standards FCCS Florida Community College System FCCS Fusion Call Control Signaling FCCS Florida Commission on Community Service FCCS Family Credit Counseling Service ) warns that the price can be costly. Each year countless tax payers tax payer n → contribuyente m/f tax payer n → contribuable m/f tax payer n → contribuente are offered refund anticipation loans A (Tax) Refund Anticipation Loan (RAL) is a high interest rate short-term loan secured by a taxpayer’s expected tax refund. United States In the United States, the taxpayer commonly applies for the loan through a paid tax preparation firm. , often referred to as "instant refunds" or "rapid refunds." It sounds great; for a fee you can receive your tax refund Tax refund Money back from the government when too much tax has been paid or withheld from a salary. now rather than waiting for the check to come in the mail. Unfortunately, most consumers do not realize they are actually taking out a loan with an effective annual interest rate of up to 700%! "These dangerous loans prey on those who are most vulnerable by convincing them to take out a loan on money that is already theirs," says Michael McAuliffe Michael McAuliffe (born in Queensland, Australia) was a barman from Sydney who was hanged in Malaysia in June 1993 after serving eight years in jail for heroin trafficking. , President of FCCS. "Most people wouldn't consider a credit card with a 700% interest rate, why should they pay those same rates to receive their tax refunds a couple days earlier?" FCCS strongly advises consumers to avoid these loans at all costs. This can be done by filing your tax return electronically, opening a bank account, and requesting your refund be directly deposited. If you are not eligible for direct deposit, waiting for a check in the mail is almost always better than paying the outrageous loan fees. About Family Credit Counseling Service: FCCS is a non-profit agency providing an alternative for those seeking financial assistance. FCCS is one of the largest consumer credit counseling agencies and has been assisting consumers throughout the country for over 10 years. For more information call 1-800-994-3328 ext. 108 or visit http://www.familycredit.org or http://www.teachmeaboutcredit.org. |
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion