Tax time always engenders a blizzard of TV ads about various tax preparation companies offering to do your return and all the different services they offer.  While it is often a good idea to have a professional do it, not all of the services they offer are ones you should use.  The Refund Anticipation Loan (or "RAL") is one of them.

People in financial difficulty, or those who just can't wait to buy that big flat screen TV, are often in a big hurry for money.  This is especially true at this time of year, when these TV ads hawk how quickly you can get it.  However patience, in addition to being a virtue, is a sound financial practice as well.

The IRS has 45 days from the date you file your return to process it and issue a refund check.  After that, they must pay interest.  Usually, the refund is paid in one to two weeks.  You can even check up on your refund status to see when you will get it.  The earlier you file your return, the earlier you can get your money.

Is getting that money so critical that you will take less than you are owed (remember, it is a loan, so the tax preparer gets its cut when the refund comes in) because you can't wait up to a month and a half?  Here is an excellent video from that summarizes the pitfalls of these loans.

Some companies, like H & R Block, offer to put it on a debit card, what they call the Emerald Card.  This is another bad idea!  The bottom line is: Be patient and "just say no" to the Refund Anticipation Loan; you will be better off in the long run.

Steven J. Richardson
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Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.