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Media > Newsletters > Consumer Advocate > January 2012 > Watch for “Instant” Tax Refunds

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Watch for “Instant” Tax Refunds


With tax season upon us, offers for fast-cash refunds or instant refunds may sound good, but in reality, many of these “instant refunds” are costly loans.

Commonly referred to as refund anticipation loans, or RALs, these loans are based on your expected tax return.

You get an “instant refund” (a loan) and the company charges you filing fees, tax preparation fees, and interest. The costs of the loan may eat up a significant percentage of your tax refund. Plus, if your tax refund ends up being smaller than expected, you will have to pay the difference in addition to the fees.
To avoid RALs, file your own tax returns electronically free of charge and have the refund directly deposited in a bank account. The average turnaround time is two weeks for refunds.

You also may be eligible for free tax preparation help, such as through the IRS’s Volunteer Income Tax Assistance (VITA) Program, which offers free tax help to low- to moderate-income consumers. Learn more at,,id=107626,00.html.