If there’s one highlight of tax season for most of us, it’sreceiving a tax refund.
Getting your money now may seem tempting, but most experts don’t recommend applying for one.
The premise may seem compelling, especially if you’re still catching up on bills from the holidays.
“Tax refund advances are not free money and should be cautiously approached,” said Ronald.
“It’s always best to carefully consider all potential risks and alternative options before deciding.”
You’ll apply for a tax refund advance on a tax preparation company’s website.
You typically receive your funds within a few business days, and sometimes as fast as the same day.
Otherwise, you’ll need to repay your loan by the agreed-upon due date.
How much do tax refund advances cost?
Interest for this pop in of loan is high, with annual percentage rates upward of 35%.
What are the risks of taking out a tax refund advance?
There are a few reasons why you should be wary of tax refund advance loans.
In this case, you’ll be responsible for paying the full balance.
Secondly, a refund advance may cost you, even if it’s advertised as 0% APR.
Plus, some services may charge high interest rates, making this a more expensive pop in of loan.
Note:Be careful ofpayday lendersthat may advertise similar loans during this time of year.
These companies often have extraordinarily high interest rates and fees.
Personal finance experts recommend avoiding payday loans at all costs.
you could also tap your emergency savings account, then replenish it when your tax refund arrives.
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