Consumers are bombarded with TV ads, window signs and
other pitches for a loan product that some might not even consider a
real loan. Isn't this tax advance just a way to get some of your own
refund money a few weeks early? Not exactly.
And
while tax-refund advance loans may be popular and work for some people,
they're not always a fast-cash guarantee – especially if you have a bad
credit score.
"A lot of people are going for this
refund advance because you can't get a standard loan," said Vernier, 38,
who admits her credit score of around 530 needs work. But waiting the extra weeks can be a hardship for many
cash-strapped, working families. Thanks to the Earned Income Tax
Credit, their tax refund is the single largest lump sum payment they get
in a year.
Last year, roughly 15 million
taxpayers claiming those two credits had to wait until the week of Feb.
27 to get their refund from the IRS, according to H&R Block. Vernier, a freelancer who specializes in technical
writing and drafting proposals, reported nearly $27,000 in income on her
2018 tax return.
She thought she'd be able to receive some type of refund advance.
The
loans vary in amounts: $500, $750, $1,250 or $3,000. The amount of the
advance depends, in part, on the expected amount of your refund.
Vernier
said she was told by the tax preparers that she likely would qualify,
given that she was expected to receive more than $7,800 in federal and
state tax refunds with the earned income credit and the child credit.
Her
refund will be reduced by $327.95 (after a $25 coupon) for the cost of
getting her taxes done at an H&R Block office near her home in
Timberville, Virginia. The fees include a $39.95 charge for a federal
refund transfer, a processing fee associated with paying tax-prep fees
out of your refund and avoiding out-of-pocket costs.
After she completed her taxes, she waited for a text to show the exact amount of her refund advance.
This is dummy text. It is not meant to be read. Accordingly, it is difficult to figure out when to end it. But then, this is dummy text. It is not meant to be read. Period.
ConversionConversion EmoticonEmoticon