Refund anticipation loan.

In plain English

A refund anticipation loan (RAL) is a short-term loan a tax preparer or lender gives you based on the size of your expected tax refund. You get cash within a day or two instead of waiting for the IRS, and the loan is repaid automatically when your actual refund arrives. The catch is the fees and interest, which can be high relative to the few days of waiting they save you. A related product, a refund anticipation check, sets up a temporary account to receive your refund and deducts a fee, which also shrinks what you keep.

01Why it matters

You're paying real money to get your own refund a week or two early, when filing electronically with direct deposit usually delivers the refund free in a short window.

02The math, step by step

You expect a $3,000 refund and take a refund anticipation loan to get it now. The preparer charges fees plus interest, set by the preparer and lender, so you receive less than $3,000. Filing electronically and choosing direct deposit would have delivered the full refund at no cost; the IRS says it issues more than nine in ten refunds in less than 21 days (per irs.gov).

03What this is NOT

04Receipts

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