More and more tax payers are using a fairly new option of taking an
advance on your tax refund.
Consumer advocates generally don't like
refund-advance products, due to both high costs and the potential for scams.
But if you're leaning toward a refund-advance product, thoroughly investigate
the price tag at various preparers before you schedule a tax-prep visit. Just
because a refund-advance product isn't called a loan, or doesn't have an
interest rate, doesn't mean it's free. Carefully read the terms and conditions
and ask plenty of questions. Depending on the product and provider, there could
be fees for applying for the advance, checking your credit and transferring the
money to you. Then there are fees related to preparing and filing your tax
return, which might be more than what you could otherwise pay if you
weren't focused on finding a tax preparer who could offer an advance.
With
concerns of refund delays, pay particular attention to product terms that hinge
on timing. You'd want to know if there are fees or a penalty APR that kick in
if circumstances delay the arrival of that refund (and in turn, your repayment
of a loan).
I say “no” to these advances and recommend checking with your local
bank or credit union they offer small-dollar, short-term loans, and those terms
may be less expensive and friendlier overall.
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