Rapid Refunds - Are They Really Worth It?

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?

Families whose situation requires them to live paycheck to paycheck may be interested in getting a rapid refund from popular tax centers such as H&R Block or Jackson-Hewitt. These companies will file all the paperwork associated with your taxes and then help you apply for their rapid refund program. Getting a wad of refund cash right away really is appealing when bills need to be paid and last weeks paycheck is already gone.

Simple, isn't it? Let's look a little deeper. Rapid refunds are actually refund anticipation loans (RALs). And as with any loan, there are always finance charges and interest accrued.

Rapid refund sounds a lot nicer than refund anticipation loan, since few people are really interested in being tied to a loan. Rapid refunds, thus, are often a source of confusion, since they are rarely equated with what they actually are, loans.

The name has been changed because many people, after enrolling in a rapid refund program, felt that they had been tricked into accepting a loan they didn't want by false advertising. When this type of loan was originally offered, it was marketed mostly to individuals earning a lower income who were eligible for the earned income tax credit, or EITC, and the interest rate charged on it was outrageously high.

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.

Something that not many people understood at that time is that electronic tax filing gets you your refund in just a couple of short weeks, which is still pretty fast. A tax preparer can complete the necessary forms on the IRS's website in your behalf, even if you don't have your own computer.

If you don't have a bank account, electronic filing is still possible, you will just receive a check by mail instead. In order to get your money even faster through direct deposit, you can open an account at a credit union associated with your church or workplace. These accounts tend to be easy to open and require extremely low minimum balances, sometimes just twenty-five dollars.

To avoid charges associated with refund anticipation loans, review all your options when it comes to getting your tax refund fast.

Article Source: http://www.hostcontent.net

Most debt consolidation loans are based on your home equity, so what can you do for 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.

Please Rate this Article

5 out of 54 out of 53 out of 52 out of 51 out of 5

Not yet Rated