Snippet of paper reading tax refund on pile of tax documents.


Many of us are in the final push to get taxes filed and to see that refund check come in the mail.  Your Preparer may suggest that your  take a Refund Anticipation Loan or (RAL).  As a rule these loans are high cost loans that allow you to pay a premium for your money that you would get any way in another 15 to 30 days.  John Rogers, attorney and Bankruptcy expert in Glasgow, KY posted the below article regarding Refund Loans.  Please think twice about this type of loan either at the tax preparer, the car lot or the furniture store.  They will end up costing you a lot of money!


Republic Bank and Trust Company of Louisville, Kentucky is the final bank in the country to be forced to eliminate their super high interest tax refund loans that prey on the financially strapped.  The bank, in conjunction with Jackson Hewitt tax service,  have conspired for years to convince needy tax filers to pay up to 149% interest for these outlandish loans that enable tax payers to receive their tax refund money a few days early. (The IRS will now direct deposit your tax refund moneys very quickly in a bank account of your choosing)

The New York Times has an excellent story on how federal regulators have finally eliminated this tactic that Republic Bank has gotten by with for years.

Following is an excerpt from the story, and here is the link to the full story:

“Recent action by federal regulators means that just one bank, the Republic Bank & Trust Company of Louisville, Ky., is offering the loans this tax season. But it won’t be doing so next year, under a settlement with the Federal Deposit Insurance Corporation. (It’s possible that some smaller payday lenders, which until recently haven’t had much federal oversight, may still offer some version of the loans.) This year, according to the consumer law center, filers who get a $1,500 refund anticipation loan from Republic through the Jackson Hewitt tax preparation chain will pay $61.22, which translates into an annual percentage rate of 149 percent for a 10-day term.”

It is sad that a Kentucky bank was perpetrating this tactic, but good news that it is being eliminated.

If, as a consumer, you are faced with the option of choosing an RAL, or tax refund loan,  this year to receive your tax refund, JUST SAY NO !