The price of impatience

Refund Anticipation Loans help you get your tax refund quicker...what is left of it.


When you are desperate for cash you become more willing to pay higher fees or interest.

Tonight we take a look at a common offer this time of year...and how much impatience can cost you.

In the late 80's Jackson-Hewitt and H&R Block started catering to consumers who hate to wait or couldn't afford to wait by offering refund anticipation loans.

Jerry Hargrave had already been preparing tax returns for 15 years by then and decided to offer RALs to his customers.

But he stopped because it put him in charge of receiving and handling refund checks and charging his customers interest.

"It appears to us like it's banking,” says Hargrave. “A professional tax preparer...he charges a fee for his work. Just like an attorney or anybody else. That's one of the reasons we don't do it."

Before deciding on a RAL ask these three questions:

What is the interest rate?

What fees are being charged?

What happens if your tax refund is less than expected?

Arkansas Attorney General Leslie Rutledge warns Arkansans this week that refund anticipation loans are costly. By some estimates you are losing 10 percent or more of your own money in exchange for getting that money within a couple of days rather than a couple of weeks.

"They need the money now and they're willing to take whatever they can get,” says Hargrave. “And that is really what happens. It's kind of sad but I'm sure a person needs the money at that time...he's going to accept that rate or that fee."

Arkansas' Refund Anticipation Loan Act requires that costs associated with such loans be clearly posted by tax preparers for all to see.

That same act requires that tax preparers give customers a written statement explaining the loan or check-issuing process.

Air date: January 19th, 2018

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