The "Tax Refund" That Really Isn't One--
It's a Loan Where You Pay to Borrow Your Own Money!
How would you like to pay a really-high price to borrow money that already belongs to you? Sounds pretty ridiculous doesn't it? This is what happens to many folks at tax time due to RAL's, or Refund Anticipation Loans. Tax-time advertisements promote "Fast Cash Refunds," "Express Money," or "Instant Refunds." These ads offer to send a refund in just a day or two, or sometimes even on the spot. However, many of these "fast refunds" are really loans, or RAL's. When someone gets an RAL, they are actually borrowing against their own tax refund money.
RAL's are usually marketed to those who qualify for the Earned Income Tax Credit and usually entail extremely expensive loan fees that typically range from $30 to $90. This translates into Annual Percentage Rates (APRs) of about 60% to over 700%. RAL fees, combined with tax preparation, electronic filing, and other fees, can end up eating away a big chunk of a refund.
The best thing to do is to plan ahead and get your tax return done and e-filed free from the IRS at a local Volunteer Income Tax Assistance (VITA) site. When you get a RAL and borrow your own money at a high rate of interest, you're lining someone else's pockets with YOUR hard-earned money!
So "keep your money in your own pocket" this year, and invest in your and your family's future. Get your taxes done at a site in our community this tax season. VITA sites open January 15, 2011! For more information or to schedule an appointment, call 2-1-1.
