What is a tax refund anticipation loans (RALS)?

RALS are short-term cash advances where income tax filers borrow against their own tax refund money. Refunds will come faster than the standard time it takes most tax filers to receive their refund through automatic deposit into their bank account, but not by much. It may be a one week time difference. There are high interest rates with these loans, ranging from about 40% to over 700%. Tax refund anticipation loans are often targeted to low-moderate income individuals with the promise of "Fast Cash Refunds," "Express Money," or "Instant Refunds." According to a 2005 study by the National Consumer Law Center, tax preparers and lenders strip about $1.75 billion in fees each year from the earned-income tax credits paid to working parents.  more