Tax refund loans are the central theme of intense marketing campaigns implemented by Jackson Hewitt, H&R Block and various other firms. A tax preparation company offers consumers refund anticipation loans. Many are finding out that refund loans are not good for consumers that are on a very tight budget.
The Media Shines the Spotlight on Tax Refund Loans … Again
ABC News recently featured a story on refund loans. Refund loans are legal financial products offered by tax preparation companies such as H&R Block. The usual tax preparer is not licensed to fund and originate loans. The tax preparation service has established ties with many consumer banking outfits. JP Morgan Chase is one prime example.
Between the loan originator and tax preparation service, the refund anticipation loan is expected to give a substantial profit to both businesses involved in the transaction. In return, the budget conscious consumer attempting to get a tax refund advance will normally pay a nominal APR of thirty three percent on a three thousand dollars anticipated tax refund.
Current California Attorney Jerry Brown resolved a suit with conglomerate H&R Block in regards to deceptive refund anticipation loan advertisements.
Current Tax Refund Loan Stats
The popular and diligent California Reinvestment Coalition revealed that refund loans are slightly more than the extreme short-term loans – normally no more than 1 to 2 weeks – loans in the year of 2004 were close to an estimated 12.38 million for around one and a half billion Americans.
The statistics display that close to forty five percent of earned capital tax credit recipients forked over two hundred five million dollars in order to cash their checks. These high fees raised the red flag with many of the leading economic analysts in the nation. There is a shocking same day fee that is attached to this service!
Still Contemplating on getting a Refund Anticipation Loan? Here is several of the Tax Refund Advance Pitfalls You Should Be Aware Of!
Many are happy to walk out of a tax preparation service office with cold hard cash within their hands. This is a wonderful convenience that thousands have been enjoyed for many years. Unfortunately, these refund loans can cause serious problems for consumers in the long run.
One prime example is when the tax preparer commits an error by overestimating the total refund amount. This places the consumer in a bad spot. He or she becomes responsible for the total loan balance. He or she should also be aware that The IRS may also freeze the tax refund. This is a critical area for those that had previous credit reversed. The situation will not improve for them until corrections take place and new returns are filed.
Individuals may also be placed in a bad position for refund anticipation loans. This position can develop if the tax refund is confiscated in order to cure an outstanding child or spousal support debt, overdue student loan, or any third party filed liens that are aimed at anticipated tax refunds.
An intense look at the critical dangers of applying for refund loans and many of the high costs associated with a tax refund advance may make one think twice about selecting evaluating other options. It probably is more logical for one to undergo the duration of waiting an extra seven days. At that point, the refund will be placed into the individual’s bank account via direct deposit. Waiting an extra seven days seems to make more sense.