Refund Anticipation Loans come with risks

Posted on February 28, 2013 


Tax Tuesday: Don’t Bet When Borrowing  


Anchorage, Alaska – Feb. 26, 2013 – When expecting tax refunds, cash-strapped households might consider refund anticipation loans, or RALs. However, Better Business Bureau warns filers that RALs come with risks.


Based on taxpayers’ expected tax refunds, these short-term loans typically target low-to-moderate income families who could benefit from immediate cash. RALs can carry annual percentage rates as high as 500 percent. In fact, these loans are so expensive that the Military Lending Act bans them for service members.


“With tax refunds, patience is a virtue,” says Robert W.G. Andrews, CEO of BBB serving Alaska, Oregon and Western Washington. “Waiting extra weeks for tax refunds can save consumers from ‘over borrowing,’ excessive fees and high interest rates.”


BBB encourages eager refundees to remember these points:

  • RAL recipients are responsible for repaying the total loan amounts, even if tax returns are less than expected.
  • Understanding the terms and conditions of RALs is critical. According to The Center for Responsible Lending, the average RAL APR in 2010 was 149 percent. Unexpected fees can cause serious financial damage.
  • The Federal Deposit Insurance Corporation has forced all major national banks to discontinue these types of loans. Be wary of sketchy lenders, both online and off.


Don’t bet when borrowing; visit




Better Business Bureau serving Alaska, Oregon and Western Washington: For 100 years, BBB has been advancing marketplace trust. BBB is a neutral not-for-profit organization that helps consumers find businesses, brands and charities they can trust. For more information on ethical business standards, BBB Accreditation, BBB Business Reviews, Charity Reviews, complaints, events and anti-fraud tips,contact BBB or visit

Anchorage Daily News is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service