HOW DOES RAPID REFUNDS WORK?
2007-01-16 02:38:19 · 5 answers · asked by cynthiaturnier 1 in Business & Finance ➔ Taxes ➔ United States
The so-called "rapid refund" process works this way:
You have your taxes done at the tax preparation place. There are tax preparation fees that you are charged. If you get a refund on your tax return, you can borrow the full amount of the refund from a bank that partners with the tax preparation firm. You sign a loan agreement saying that the bank can take your refund to repay the loan.
The bank loans you the full amount of the refund. The bank charges you finance charges of course. All finance charges and the tax preparation fee are taken out of the amount loaned to you.
You receive your money in a day or two. Sometimes it is possible for you to get the money instantly. Your money can be given to you as a check, debit card, or direct deposit, as you request.
When your refund is issued by the IRS, the bank lending you the money receives the refund in satisfaction fo the loan.
Since you are borrowing the money for a short period of time, typically the 8-15 days it takes for the bank to receive your refund, the interest rates are high when they are figured at an annual rate. However in some cases the interest is no more than you would pay for a cash advance on your credit card. Pay close attention to the charges and compare before you make your decision to do this.
2007-01-16 05:24:15 · answer #1 · answered by ninasgramma 7 · 0⤊ 0⤋
you can go to irs.gov and click on free file and you can e-file your taxes for free in most cases.it takes 3 weeks to get a refund which is how long it takes with rapid refund.
2007-01-16 10:49:40 · answer #2 · answered by wendy d 1 · 0⤊ 0⤋
It works by taking a big chunk of your refund for very little work; usually two to three hundred dollars in fees and charges of various names. You can go to IRS.GOV and file your tax return free and have your refund electronically transmitted into your checking or saving account absolutely without charge. You can also got to a VITA site and your return will be prepared without charge, electronically filed, and your refund electronically deposited in checking/savings; also wihout charge.
2007-01-16 10:58:48 · answer #3 · answered by acmeraven 7 · 1⤊ 1⤋
it's a loan or advance from the company preparing/transmitting your return. the fees charged, if annualized, equate to a wicked percentage rate. file early and wait for the return. early filers can generally have the refund deposited into a bank account within 2 weeks. why pay outrageous fees?
2007-01-16 10:47:07 · answer #4 · answered by dwalkercpa 5 · 1⤊ 1⤋
They charge you a huge interest rate. consumer advocacy groups highly discourage these deals.
Don't do it. it only takes a couple weeks to get your refund but they charge you over 20%. !!!
2007-01-16 10:45:38 · answer #5 · answered by a1tommyL 5 · 1⤊ 1⤋