Warning from Illinois Attorney General Madigan
This Tax Season:
Beware of the High Cost of Tax Refund Anticipation Loans
Tax season is once again upon us. If you are expecting a refund, a Refund Anticipation Loan (RAL) may sound like a great way to get your money faster. What you may not realize, however, is that an RAL is not a simple shortcut to getting your refund—it is actually an outrageously expensive short-term loan.
Q . Recently, a friend was telling me about instant income tax refunds. I am running short on funds and the idea of fast cash is tempting. How do these instant refunds work—and are they a good deal?
A . An instant tax refund may sound tempting, but it's definitely not a good deal. Refund Anticipation Loans, or RALs, are loans that consumers apply for through their tax preparers. In a typical transaction, a tax preparer lends the consumer the amount of his or her expected refund, minus interest and fees, and the consumer receives the money in one to two days. The debt is paid off when the government deposits the consumer's refund directly into the bank that issued the loan. Because the loan is paid back when you receive your tax refund, the term of an RAL is short—usually seven to 14 days. For more info., contact one of the offices directly.
ATTORNEY GENERAL LISA MADIGAN’S CONSUMER FRAUD HOTLINES
Chicago Springfield Carbondale
1-800-386-5438 1-800-243-0618 1-800-243-0607
1-800-964-3013 (TTY) 1-877-844-5461 (TTY) 1-877-675-9339 (TTY) |