Refund Advance Loans And Refund Anticipation Checks 101

MoneyTips

Are you counting on your tax refund to pay off bills? You may need the cash before your refund arrives.

The IRS website states that typical refunds take less than 21 calendar days if you e-filed your return. However, if you are claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) your refund may be delayed further.

Tax preparers may offer a solution in the form of refund advance loans (RALs) and refund anticipation checks (RACs). What’s the difference between the two, and is either one right for you?

Refund advance loans are just what they sound like – a loan issued by a lender for the amount of your anticipated tax refund. You are loaned the money up front and your refund is used against the loan balance.

Predatory, older-style RALs were basically eliminated by rule changes in 2010 and 2012 due to high interest rates and other charge…

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