We are right in the middle of tax season, and that is bittersweet for my family. We are still lucky enough to get a decent refund, but the money seems to come and go too quickly. This year we filed our taxes online and our refund was deposited to our pre-paid debit card within two weeks. It was refreshing to not have to worry about taking out a refund anticipation loan. We did that one year and it was a big mistake. This is why I regret taking the refund anticipation loan, and how much it ended up costing us in the end.
The reason for the loan
The first year we had our son was the hardest. We were learning how to adjust to life as parents and balance the budget. Ultimately we failed and were behind on many bills by the time January 2011 rolled around. As a couple, my husband and I decided to go to a tax place that was offering a refund anticipation loan in order to make sure everything was caught up and we wouldn't have to endure further aggravation from creditor calls.
After the tax preparation place did all the paperwork and figured out our refund, we were eligible for a $1500 loan that would be paid back when our refund came in, plus interest. Being desperate for the money, we went ahead and took the loan. Unfortunately for us, it was more trouble than good. Our refund came back in three weeks and by then we had already racked up $50 in interest, and $20 in fees for the line of credit being accessed. We had our preparation fee taken out of our refund, along with a one-time processing fee for the loan, and then these extra fees. After all was said and done, we lost around $700.
After realizing what the process truly cost us, we have decided a refund anticipation loan is no longer an option for us. Since then, we have filed our own taxes online and have had the refund deposited on to our debit card. There is no reason we should be sacrificing $700 in order to have immediate access to that money. If we ever find ourselves in that position again, the creditors will just have to wait. I get sick thinking about all that wasted money. Being uninformed and unprepared with this process was our downfall. Luckily we learned our lesson and will not be going back.
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