Rapid Tax Refunds Get Expensive Real Fast

Instant gratification comes with a price.

This year more than 11 million taxpayers will take out refund anticipation loans, or RALs, and receive tax refunds in as little as three days, a 16% increase over the 9.5 million in 1994, according to a study from the Consumer Federation of America and the National Consumer Law Center.

But to do so, taxpayers will pay annual interest rates between 67% and 774% and more than $800 million in fees, the CFA and NCLC say.

"They should be called 'consumer impulsive loans,'" says Steve Rhode, president of Myvesta.org, a financial crisis center. Indeed, many leap before they look at what RALs cost.

How It Works

...