R-A-L is a B-A-D Deal

Everyone wants their tax refund quickly, but watch out for this bad deal. Some Tax Prep Companies offer a Refund Anticipation Loan, a RAL. These loans are for the short period between when a tax return is filed and the IRS deposits the money into the lender’s account (usually less than two weeks). A RAL allows access to the anticipated refund in one day or less.
The problem with these loans is they are extremely expensive!
The loan amount is the ‘anticipated’ refund minus loan fees and tax preparation fees. If there was an error or miscalculation on the tax return, the refund could be less than anticipated. The entire loan balance must be repaid even if the tax refund is denied, is less than expected, or is frozen.
People who do not have bank accounts are often tempted by a RAL because refunds issued as a paper check can take up to 6 weeks to receive in the mail. Having access to the funds early comes at a large cost because of the fees associated with these loans. Typical fees include a $75 "processing fee", an additional "service fee" (equal to 10% of expected refund amount) and a $50 bank fee.
Tax returns that are e-filed  with direct deposit refunds will result in the quickest refund. Electronically filed tax refunds should be deposited into a checking or savings account within 10-14 days. 1040 Central gives all the details.
RAL is a bad deal for the customer.  Be patient and do not choose to get a Refund Anticipation Loan.
Keep your refund and spend it wisely!


  1. A lot of people don't realize how quickly their refund will be in their pockets. In Virginia, the state refunds are often deposited within several days and for federal it can be a little more than a week. To save the interest and fees for the RAL it is worth the short wait.

  2. Thanks for this informative post which is very useful to loaners.

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