|
|
NEWS
RECALLS
COMPLAINT FORM
SCAM ALERTS
RESOURCES
Small Claims Guide Class Actions Lemon Laws FAQ Newsletters |
|
| Automotive Education Employment Electronics Family Finance Health Homeowners Insurance Pets Shopping Travel |
|
|
|
![]() |
Instant Tax Refund Always Carries a PriceNothing free about refund anticipation loans |
||||||||
|
By Mark Huffman January 23, 2008
What exactly is a refund anticipation loan? H&R Block, the nationwide financial services firm that pioneered the RAL, settled a class action lawsuit in 2006 that challenged the fees and interest rates it charged for refund anticipation loans. Now, on its Web site, it offers this disclosure to consumers:
Note the time difference in when the taxpayer receives the money -- one or two days with an RAL, but "up to 15 days" by simply waiting for the refund from the IRS. So, what does it cost to save 10 or twelve days? "There are two bank fees associated with a RAL: a refund account fee and a finance charge," H&R Block says on its Web site. The amount of the fees varies, but when measured as payment for a loan of less than two weeks, the annual interest rate can be extremely high. Low-income taxpayers targeted"RALs continue to drain over a billion dollars from the pockets of American taxpayers including Earn Income Tax Credit recipients," said the Center For Responsible Lending, in a statement. The Earned Income Tax Credit (EITC) is a refundable credit provided through the tax system and intended to boost low-wage workers out of poverty. The EITC is the largest federal anti-poverty program providing over $38.7 billion to 22 million families in 2004. So, even though these wage earners paid little or nothing in the way of taxes, they are entitled under the EITC to sometimes fairly large tax refunds. Consumer groups argue that many RALs are targeted at this group. In 2007 H&R Block introduced an option to its RAL program that adds even more fees. Now, instead of receiving a check or having the loan amount deposited directly in a bank account, taxpayers may get their loan proceeds on plastic. Prepaid credit cards"This year, clients can receive the proceeds of their loan payment on the H&R Block Emerald Prepaid MasterCard, which is tied to an FDIC-insured bank account," said Tim Gokey, President, H&R Block Retail Tax Services, in January 2007. "Clients can direct deposit funds to the account year-round with no fee for point-of-sale purchases, have access to a worldwide ATM network, and can avoid expensive check-cashing fees." While the card might prove convenient for someone who does not have a bank account, it does not come without fees. First, the user is charged $1.85 each time the card is used at an in-network ATM. There is an additional fee if the ATM is outside the network, and you may be charged, even if you don't complete the transaction. To add insult to injury, if you are denied cash when using your card at an ATM, you are charged 50 cents. While Internet account balance inquiries are free, you will be charged $1 a month for a statement through the mail. Need to talk to a customer service rep? It'll cost you $2. Really freeBut regardless of how the loan is paid, state attorneys general and consumer groups are nearly unanimous in their advice to consumers to avoid RALs in any form. "Taxpayers can save themselves expensive fees by saying 'no' to RALs," said the National Consumer Law Center and Consumer Federation of America, in a joint report. "If they want quick refunds, they can get them in two weeks or less by filing their tax returns electronically and having refunds directly deposited into their own bank accounts. That's a FREE quick refund." Report Your Experience
|
||||||||
Back to the top | |
|||||||||
Advertisement
|
|
Custom Search
|
||||
|
AUTOMOTIVE Dealers Manufacturers Service Extended Warranties Lemon Laws Recalls Tires Transporters FAMILY Aging Children, Parenting Recalls Dating Education Entertainment Pets Weddings |
FINANCE Annuities Banks Credit Cards Debt Collection Debt Counseling Insurance Investing Loans Mortgages Payday Loans Student Loans Tax Prep HEALTH Doctors Drugs, Pharmacies Health Clubs Hearing Care Hospitals Nursing Homes Nutrition, Diets Vision Care Weight Loss |
HOUSE & HOME Appliances Cookware Furniture Home Improvements Lawn & Garden Movers Pools & Spas Realtors, Rental Agents Recalls Utilities ELECTRONICS Cable TV/DBS Cameras Cell Phones Computers Home Electronics Internet Access Local Phone Service Long Distance VoIP |
SHOPPING Delivery Services In-Home Online Retail Stores Sporting Goods Supermarkets Telemarketers TRAVEL Airlines Bus Lines Car Rental Cruises Hotels Travel Agents Trains RESOURCES Class Actions Complaint Form Small Claims Guide Lemon Laws |
CONSUMER NEWS Latest News Automotive Telecom Financial Health Homeowners Scams Seniors Travel More ... RECALLS Automotive Children's Products Drugs Food Household Products Sporting Goods ABOUT US FAQ Privacy Policy Advertise With Us Newsroom Syndication Terms of Use |
Terms of Use Your use of this site constitutes acceptance of the Terms of Use
Copyright © 2010 ConsumerAffairs.com Inc. All Rights Reserved. The contents of this site may not be republished, reprinted, rewritten or recirculated without written permission. |
|