Fraud Tip of the Day - February 1
Tax Refund Anticipation Loans
Millions of Americans can't wait for tax season becuase for many it means receiving a hefty refund check from the IRS. Some will use their refunds for vacations or special purchases but many need that money desperately just to make ends meet. Many of these people need their refund check so badly that they're unable to wait a few weeks for it to arrive by mail and turn to tax refund anticipate loans.
Don't give in to temptation this year! These loans carry high interest rates that cut deeply into your refund. It works out great for the lender because these loans are relatively low in risk. The money will arrive from the IRS within a few days anyway. In addition, the IRS lets lenders know who is a high risk by alerting them about any claims against the refunds of those applying for loans.
So if the risk is low and the interest rate high what is going on? It's simple really. The companies that offer these loans are preying upon those that can least afford it. In the Middle Ages they called it usury and it was considered a crime. People offering these loans may not technically be criminals but sometimes their practices make it hard to tell the difference.
So if you've been thinking about getting one of these loans do some research and maybe a cost benefit analysis. Are you willing to give up a lot of money just so you get your refund check a few days earlier?
