Making Money Journal

Bankrate.com has good article on how waiting on the refund from the IRS is better than going through those high interest anticipation loan schemes.

• • Go electronic. Abandon the traditional paper return sent via the U.S. mail and file from your computer. Last year, more than 73 million taxpayers filed their returns electronically. You’ll get the money almost as fast as you would with a refund anticipation loan and get it without paying any loan fees or interest.

  In fact, you may not need to pay for anything. An Internal Revenue Service partnership with tax preparers and software companies offers free online tax preparation and e-filing to some taxpayers. The IRS says that whereas paper filers could wait up to eight weeks for their refunds, most electronic filers can expect their tax checks to show up in their mailboxes in half that time or less. The agency also points out that the error rate is less than 1 percent for electronic filers.

  • Direct deposit. Electronic filers who opt for refund direct deposit do even better. More than 61 million people got their refunds this way last year, an 8 percent increase from the year before. The IRS says the money generally shows up in taxpayer bank accounts in 10 to 14 days. Even if you file the old-fashioned paper way, having your refund deposited directly into a bank account cuts the time you have to wait for your tax cash. Plus, it’s added protection against lost or stolen refund checks sent via the mail.
  • Use store financing. If you want your refund to finance a must-have new appliance, store interest rates usually will be better. Many stores offer free financing for limited time periods. By then, the refund should have arrived and you can use it to pay off the store credit — and pay no interest at all.

I think all those are better ideas, but the last should only be used as a last resort.

Filed under: Finance and Investing

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