subject: A Refund Anticipation Loan Versus Rapid Refund [print this page] A Refund Anticipation Loan versus Rapid RefundThose who have accountants file their tax returns for them are usually given their money in two different ways: The refund anticipation loan and rapid refund. The question here is which of the two of these is better? Which one should you do and which would should you not do? You might be surprised at the answerRefund anticipation loanA refund anticipation loan has actually been labeled "predatory lending". This is because the tax preparer actually loans the money out of their own funds and then will reimburse themselves with the money the IRS refunds on your tax return. When the tax preparer completes your return and transmits it, they are anticipating that you will really receive that particular amount of money. Approximately 10% of individuals choose this so that the money can be in their pockets immediately. However, there is a hefty price associated with taking this loan. Although it will only be about 10 days before the tax preparer receives the money, they are charging high interest and that can cost big bucks to the taxpayer.It is estimated that Americans are paying around $500 million each year to have their money in their pockets immediately. Unfortunately, lower income people tend to be the ones at risk because they have a greater need to have the money immediately. This is a program that was formed in 1975 and is said to target those who receive the earned income credit because of the increased amount of the refund. This increases the amount of interest that is charged. Yes, it may seem silly for someone to pay $200 of an $800 return to have their money right now, but it does happen. When someone needs the money immediately, they will pay the cash for it. Rapid RefundRapid Refund is a completely different story. It does not put the money into a person's hand immediately, but due to e-file of the tax return and the faster rate of return that e-file presents, a person can have their money within two weeks or sometimes less. Some have been known to receive their refund in a matter of days.Rapid Refund is frequently done through some accounting offices in the form of debit cards. A debit card is awarded and should be funded on a certain date. Once that card is funded, it is used just like any other debit or credit card. A person is also given a pin number so that they can withdraw cash from an ATM machine. Money may also be deposited into a person's bank account. The debit card option is given to those who do not have checking accounts or they prefer to not give their checking account information. Nevertheless, some tax preparers do not offer the debit card program, so it is important to ask if this is something that you want. Obviously, rapid refund is the winner although you won't have the money in your hand the very day you file your tax return. However, you will save money and will still have your refund rather quickly.
A Refund Anticipation Loan Versus Rapid Refund
By: Gen Wright
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