Experts: Think twice about tax refund anticipation loan - KFVS12 News & Weather Cape Girardeau, Carbondale, Poplar Bluff

Experts: Think twice about tax refund anticipation loan

ANNA, IL (KFVS) -

It's that time of year again when many are thinking about taxes and that refund check. But experts say think twice when it comes to getting a refund anticipation loan.

"If you really could use the money right then it's worth it," Katherine Inboden said.  

For the past few years, Inboden says she's needed her tax refund right away to help pay bills. 

"With three kids I gotta have the money for car repairs, home repairs, clothes...and the faster we get it the better," Inboden said.  

To get that money, Inboden filed for what's known as a Refund Anticipation Loan and a short time later she had a large chunk of her tax return dollars.

But that speed comes at a cost.

"The interest rate, I believe, on it is at 148 percent," Jackson Hewitt Anna Store Manager Harlan Browning said.

On top of high interest are fees. Browning says customers can get up to $1,500 back. But adds they typically must have a return worth more than $2,000. Browning says this type of loan is simply a service they offer customers.

"If they need it, they'll tell me how they want to do it," Browning said.

But Southern Illinois University tax professor Ray Rodriguez warns against getting a refund anticipation loan. He says between the high interest rate and fees you lose out.

"You get nickel and dimed and you don't notice it because it comes out of your loan and many times you are not writing a check for this amount so it doesn't hurt as badly," Rodriguez said.

Words echoed by Inboden. She says while the loan was useful they still lost some of their refund dollars in expenses attached to the loan.

"Unless there is something where you really have to have the money immediately, just wait the week or two," Inboden said.

Experts says if you get a refund anticipation loan and your tax return is not enough to pay it off, you must come up with the rest of the cash.

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