Commentary By Page Schindler Buchanan: Early Refund Woes | WAMU 88.5 - American University Radio

WAMU 88.5 : News

Commentary By Page Schindler Buchanan: Early Refund Woes

Play associated audio

Tax Season is upon us, and if you're like most Americans who are counting pennies, you can't get your refund fast enough.

For many low-income Americans, the urgency of unpaid bills and the challenge of not having a bank account can lead to a path that costs them too many precious refund dollars: refund anticipation loans.

Refund anticipation loans, or RALs, are short-term loans to give people their anticipated refund in as little as a day, as opposed to waiting three or four weeks for an IRS check.

Sound like a good way to get your money a little early? Well one of the major suppliers of these loans charges what works out to the equivalent of an annual interest rate of 149 percent -- quite a chunk for a couple weeks advance.

And the people targeted for these loans can hardly afford it. Eighty seven percent of taxpayers who applied for a RAL in 2009 were low-income, and nearly two-thirds got the earned income tax credit. This means that federal dollars meant to help keep families out of poverty are going instead to pay short-term lenders.

We see these taxpayers every day in our free tax prep clinics, where we save low-income families fees they can't afford and steer them away from refund anticipation loans and related products.

They often don't even realize how much they are paying for these loans and just consider it part of the, rather expensive, tax preparation process.

If it sounds like someone should be doing something, you're right.

This tax season the IRS blocked access to information on taxpayer debt, making RALs riskier for lenders. And the FDIC is cracking down, effectively ending the practice, though one lender is fighting back in court.

What do you think? Share your comments below.

NPR

Mia Wasikowska On The Sounds Of Camels And The Lure Of Travel

Melissa Block talks with actress Mia Wasikowska about her new film, Tracks, which follows a woman on a long journey with only camels and a dog for company.
NPR

Giving Chickens Bacteria ... To Keep Them Antibiotic-Free

What does it take to get chickens off antibiotics? According to Perdue Farms, an added dose of the "good bacteria" known as probiotics can help crowd out the harmful microbes that make a chicken sick.
NPR

Why Did Congress Kick The Can On Funding Islamic State Mission?

The president got approval for his plan to train and equip Syrian opposition fighters, but lawmakers didn't approve funds to pay for it or the broader air campaign.
NPR

It's 10:10. Do You Know What Time That Is?

Ever wonder why watch ads always display the same time, 10:10, and why Apple's new watch is a minute early? NPR's All Tech Considered ponders the tradition of watch times in advertising.

Leave a Comment

Help keep the conversation civil. Please refer to our Terms of Use and Code of Conduct before posting your comments.