Keep in mind the real cost of refund anticipation loan – Bangor Daily News

Keep in mind the real cost of refund anticipation loan – Bangor Daily News.

The income tax filing deadline is less than a month away, and taxpayers who are expecting refunds may be planning what they will do with that money.

Those who felt they could not wait might have taken out what’s known as a refund anticipation loan, or RAL. Several major tax preparers offer the loans to clients who have refunds coming but want to put the cash to use ahead of time.

This year, they’re required to post signs stating the interest costs on such loans, an annual percentage rate of between 300 and 400 percent per year. That’s not a typo; that’s the range of such fees when computed on an annual percentage basis.

We’ve discussed RALs in the past, but in light of recent economic trends the message is worth repeating: Such loans generally cost much more than they’re worth.

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