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If you’re like me, tax season couldn’t come soon enough. You’re either gearing up for a refund or you’re organized and ready to put tax season behind you.
Early Tax Refund Anticipation Loans: Who Offers Them and Should You Get One?
If getting a refund is the reason you’re ready for tax season, then you’ve probably heard of early tax refund anticipation loans. If you’ve been debating whether or not to use an anticipation loan here’s what you need to know.
Note: Our main thought on these loans and products is NO. But we’re also not your mother, so at least get educated on what you need to know before you take them on.
Before you read on, make sure you check out our tax refund calendar so you know when you could potentially expect your refund. It might make more sense to wait than to get a loan. Now onto the tax refund anticipation loan stuff.
What Is An Early Tax Refund Anticipation Loan?
An early tax refund anticipation loan is a loan that you get from a tax preparation service instead of waiting for your refund to come. These loans can be given as early as the day your tax return is accepted by the IRS. (Which is about 3 weeks sooner than waiting for the IRS refund.) They normally have tax preparation fees deducted from them and may come with other fees for taking out the loan.
These loans are popular since they can help taxpayers receive their refunds early. Anticipation loans are generally given out by a special debit card, check or direct deposit.
Note: Be very careful when getting a debit card or gift card. If you enter the wrong information or email, your refund can be “lost” and it can be nearly impossible to get your money back.
When your actual tax refund is available, the check will be sent to the tax preparer who gave you the loan, automatically paying your anticipation loan back.
I DO NOT recommend using your tax refund for a cash advance or to fund any type of refund online payday OR anticipation loan. As you will see below, they are expensive compared to other options available.
Furthermore, some unscrupulous tax preparers may charge higher fees than they are allowed to (or even hidden fees or interest). You need to do your due diligence!
If you’re in a pinch and think this is the only way, be smart about your choices. Many people looking for a loan might be better served by one of the options on our best personal loans list.