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Why I’m Not Getting a Refund Anticipation Loan or H&R Block Emerald Card

Tax time! I was successful in rounding up all but one of our W-2 forms, so I’ll be looking for the other and then getting down to work. As I mentioned, I have a free copy of H&R Block’s Tax Cut software which I think will be a good start.

However, I won’t be taking H&R Block or any other company up on their “generous” offers of refund anticipation loans or refund debit/credit cards. I’m not going to pay people money to get the money faster.

While this loan chart (PDF) isn’t very clear–that is, it doesn’t have as much information as it should–it shows that getting a refund anticipation loan from H&R Block will cost you at least $30, probably $50+ for a $200 refund. They’re unclear as to whether or not you need the “bank check” but it appears so.

Ok, so 1/4 of my tax refund would go to the account set-up fees?

That’s an awfully big slice of the pie.

But there’s more. The H&R Block prepaid Mastercard carries an ATM withdrawal charge. If I only withdraw money once, and do it from the compatible ATMs, it’ll just put me out $1.85. Of course, that’s per-transaction. So 10 transactions and I’m out another $18.50. But that doesn’t count transactions made at ATMs run by other banks, for maybe $2-3 per transaction. Sure, that would happen anyway but it’s a factor to consider.

My debit card doesn’t charge me for withdrawals, so I only have to worry about the latter fee. H&R Block customers have to worry about both.

If I say “screw it all” and decide to withdraw my money at a bank…that’s a $20 charge.

Now once you get up to big refund amounts like $5000, the percentage you’re paying goes down. But they have more time to nab your with ATM fees and the like.

Oh, and speaking of time, did I mention that the card will eventually expire? Yep. So then they’ll mail you a check for any remaining balance minus remaining fees.

One saving grace, this is definitely a prepaid debit card (with all the hassles that brings) and not a credit card. Once the funds are gone, it stops working. Anything else would have been a travesty—can you imagine?

So those are my thoughts on the H&R Block program. I like my money. I’m tired of the federal government having it. If they’re going to give it back I’m sure as heck not giving a significant portion (like more than 25% if we’re on the lower end of the scale!!!) to someone else just so I can get it sooner. No way no how.

This program is directed at two groups of people–those who can’t wait and those without bank accounts.

If you think you can’t wait, look at these fees and think again. Maybe you truly can’t, but maybe you can if it’ll mean that much more money.

If you don’t have a bank account, carefully evaluate all these fees. Will it really save you money on just getting the check cashed?

Related reading:

Patrick of Cash Money Life also thinks refund anticipation loans suck. He mentioned the Jackson Hewitt RALs, but apparently they didn’t have pricing online. Shady? I think so.

This also reminded me of Gibble’s post on delayed gratification. It’s certainly a case where waiting longer gets you more money!

{ 3 trackbacks }

Monroe on a Budget » Blog Archive » Metro Detroiters going without bank accounts - and paying for it
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Patrick March 17, 2008 at 9:24 pm

We live in a “must have it now, at all costs” society. It’s unfortunate…. Companies will continue to make these products available as long as people are willing to pay for them…

Thanks for the mention. 🙂

Becky@FamilyandFinances March 17, 2008 at 9:30 pm

It’s so expensive to do it, I really can’t believe that anyone falls for that kind of thing!

Steven March 17, 2008 at 9:47 pm

I’ve never understood the rationale behind being one of the “unbanked.”

Is it that difficult to get or qualify for a bank account? Are people just plain afraid of them (i.e. the ‘hide it in a mason jar buried in the backyard’ crowd)?

Going Gazelle March 17, 2008 at 10:34 pm

The “unbanked” was an eye opener to me within the last 6 months. I work on the edge of Detroit. Its estimated that 40% of the people there do not have a bank acct. They stand in line and pay cash for everything. You also have to drive miles to even find a retail bank in Detroit city proper. The HQ is downtown – but all the retail branches are out in the lush green burbs where people with money are. You’ll see 5-6 branches every mile of town.

25% of the agents in a call center I know of (who also live in Detroit) do not have bank accts either….. These are people making $15/hour plus bonuses. $35-48k a year. Blows your mind….

Shoot you can’t even get an ING account without a credit check. I’ve referred people and they’ve been turned down by ING.

AARP newsletter this month had an article that Social Security is being tested in about 4-5 states where its placed on a debit card. With all the insane fee structures you can immagine for cash withdrawals.

Payday loans. Tax anticipation refunds. Direct deposit to debit cards. Check cashing services…. This is all poor people doing poor people things – and staying poor people… Its really a sad situation….

I’m told its a cultural & psychological thing from some co-workers who broke out of inner city mentality. We’re poor people and this is just the ways things are…. We can’t trust the rich people … they’re out to screw us…. (and a lot are out to get them with rip off services and fees). They’ve totally lost hope….

fathersez March 18, 2008 at 12:33 am

Thank God, we don’t have this refund anticipation loans in our country.

It’s funny how I had a good image of H & R Block in my mind, from those days when I used to read Entreprenuer Magazine. Now the name & image sucks.

Funny about Money March 18, 2008 at 2:13 am

What a scam! And as Going Gazelle observes, it’s clearly aimed directly at the poor and uneducated.

Around here people who don’t have bank accounts are often recent (legal or illegal) immigrants who are afraid of being hassled, don’t understand the system, and think it’s associated with the government. Any time you pay them with a check, they have to go to a cambio, where they’re royally ripped off for the privilege of cashing it. I try to pay them about 20% more than their requested fee, so they’ll take home something like what they think their labor is worth.

Andrew Stevens March 18, 2008 at 4:35 am

A larger point: if at all possible (and I realize sometimes it isn’t), you should minimize the size of your refund as much as possible anyway. Best of all is to owe money (so long as you don’t have to pay penalties) and earn interest on it yourself until taxes are due in April.

Due to some taxable events last year, I have to give the IRS about $3100 (and another $1300 to my state Department of Revenue). Fortunately, I am protected from penalties by the “prior year safe harbor” provision. (So long as you pay 100% of your prior year’s taxes during the year on a quarterly basis, 110% if your AGI was over $75,000 in the prior year or $150,000 for married filing jointly, you are completely safe from penalties.) This provision even protects you if, as in my case, you know for certain that you’ll owe a lot more money than you’re withholding. By the way, even the penalty, should you owe it, is not too terrible, contrary to horror stories you might have heard. It usually works out to less than 9%. It’s dependent on the Treasury Bill interest rate plus a 0.5% penalty per month the payment is late. (By the by, while penalties for underwithholding aren’t too bad, penalties for fraud, where you deliberately evade taxes and get caught, can be much, much higher. By no means is it smart financially to cheat on your taxes. Other penalties can also be tough – such as failure to file a timely return or accuracy-related penalties.)

Also, I should stress that if you’re in the position (to be avoided) of owing taxes and are unable to come up with the full amount by the deadline, you’re much better off filing your return and paying when you can then trying to avoid the issue by not filing. The penalties for the former are fairly reasonable; the penalties for the latter are not. Ideally though, if you’re going to owe taxes, you should keep a sharp eye on how much you’re going to owe so that you can budget for it.

Fabulously Broke March 18, 2008 at 5:21 am

That really is a scam. I bought tax software but my taxes are complicated this year….

OT, but I got the bag!

Ron@TheWisdomJournal March 18, 2008 at 11:54 am

I love using TaxCut, but with direct deposit into my already existing checking account, I had my state refund in 4 days and my federal refund in 8. What’s the rush?

SavingDiva March 18, 2008 at 12:33 pm

Wow! That sounds like a horrible deal! I know people take advantage of it, but I just wish I could shake those people before they did!

ms. m&p March 18, 2008 at 9:26 pm

What a ripoff! I’m glad you posted about this. Hopefully some people will read it and pass on getting the advance. The IRS direct deposit takes almost no time!

erik March 18, 2008 at 10:52 pm

great post. refund loans are as bad as payday loans. The hit you take to get your money a month early is not worth it.

Idomeneo March 21, 2008 at 4:17 pm

Not to mention that with the “loan” they do a credit check, which is a ding to your credit score.

badluck February 12, 2009 at 12:41 am

everyyear ive gone to a private loan company to do my taxes and got my anticipation loan that day this yr i moved to a different state and did my taxes with h r block n i wasnt approved for same day then not aprroved for one to three day so now i got to wait for eight to fivteen day wat happens wen im not approved for that feeling screwed yep i am

keisha February 9, 2010 at 2:05 am

First off they should have told us that they were going to do a credit check in order to get the RAL Fast cash this year, but hey they just sit there and take your monies just want to get a quick buck out of you and yes it is not right that they charge all the fees just to get your monies. They don’t mind taking it from our check every pay period with no problems and then you have to go through all the red tape just to get it back. The people of society just dont care anymore. Everyone is just out to make a dollor out of fifteen cent. But hey to all you that read this, just remember every dogs got his day. Much Love Keisha from SC…

kellie January 14, 2011 at 9:39 am

What are they doing this year for taxes if no more ral loans do they have other programs.

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