Home > Payday Loans > Instant Tax Refunds An Alternative To Payday Loans
Instant Tax Refunds An Alternative To Payday Loans |
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Instant tax refund is nothing but a substitute to payday loans. Instant refunds are also called rapid refunds like payday loans, or 24- or 48-hour refunds. Whatever they're called, they are really a loan. In fact, the name banks use for them is Refund Anticipation Loans. They are offered by a number of businesses, including some tax-preparation services. Here's how they work. You provide the loan company or tax-preparation service your W-2 and it estimates what your tax refund will be on your completed tax form. The company will then offer an amount equal to your expected refund minus its fees. When your actual refund arrives a couple days or weeks later, the company keeps it to cover its fees and the money it loaned you. Instant Tax Refunds are dangerous for the same reason payday loans are-extremely high interest rates. The fee that companies charge for instant tax refunds equals an APR ranging from 71% to 701%. Just like payday loans, this interest rate is a lot higher than most credit cards or car loans. Just what does this extremely high interest rate get you? You get your money as little as eight days earlier than the IRS (Internal Revenue Service) could get it to you for free. If you use the IRS e-file program and have your refund direct deposited, you can get the refund in anywhere from 10 days to about three weeks. National firm charges $39.95 to get you a $200 refund in 48 hours. Is getting your money eight days faster really worth $39.95? Instant tax refunds are also a bad idea because you may not get the entire refund right away. A leading national firm will only loan you $500 the first time you use the program. You have to wait two weeks for the rest of your refund. In that much time, you could have your entire refund through the IRS e-file system and not have to pay a fee. There's one more thing to watch out for with instant refunds. When you get the instant refund, they often base it on an estimate of your actual refund. If your actual refund is less than what they loaned you, you have to pay the difference. If you don't have the money, they send it to a collection agency. The bottom line is instant tax refunds are nothing more than extremely high-interest loans as same as payday loans. Be patient. Go to the tax center. It will prepare your taxes, including e filing, and you will get your entire refund in a couple weeks. What can you do to avoid need of payday loans or instant tax refunds? The first and most important thing is to set up a budget and live within your means. A budget is important to show you exactly how much you can afford for necessities like rent, utilities, and food, and how much you have left over for luxuries. If you need help with setting up a budget, talk to your chain of command or contact your command financial specialist. If you run short, though, consider other options before turning to one these loans. See if family members can help, or your credit card company about payday loans. Even the cost of a cash advance charged to your credit card will be a great deal less that one of these loans. Remember, though; pay off your credit card off at the end of the month. Finally, call the companies you owe money; they may be willing to make other payment arrangements. It doesn't hurt to ask. Are you living your financial life paycheck to paycheck? Wondering how you will pay all those bills? Unfortunately, many people are in the same financial situation. Even more unfortunate is that some turn to payday loans and instant tax refund loans when they need money fast. These loans may sound like an easy way to get the money to pay off bills. The fact is that they can end up being very expensive and creating even more problems. In the end, if you absolutely must use payday loans, make it for the least amount possible. Don't get sucked into the cycle and end up paying more in fees than you borrowed in the first place. If you need some help as you work through your options, consider seeing a legal assistance attorney. Financial institutions and experts can help you negotiate with your creditors and help you decide which option may be best for you!!! |
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