A RAL is a high-interest loan usually
offered by a tax preparer. These so-called "instant" or "24-hour" refunds
are actually loans that come with fees and interest that reduce the amount of
any refund anticipation check.
Before
you sign up for a RAL, here are three things you should know.
A Refund Anticipation Loan (RAL) is NOT a tax
refund. Many people think the check they get from their tax
preparer is their tax refund. This is false. A RAL is a
loan. It is NOT an "instant refund." The check you receive is less
than your actual refund because of the fees that are deducted. When you
add up all of the fees (administrative and lending), it can amount to an
annual interest rate of as much as 300%!
A RAL can damage your credit
report. If you do not get the tax refund amount you anticipated,
you are still responsible for repaying the loan and any associated fees.
If you're unable to repay the lender (usually a bank), the bank will report
the unpaid debt to a credit agency which will negatively affect your credit
report.
You are not required to take out a RAL from your
tax preparer. Tax preparers' main responsibility is to prepare
your taxes. If they offer you a RAL, you can refuse to take out the
loan.
During tax season, educate yourself about what to do before, during and
after filing your taxes in order to claim government tax credits and
protect yourself from deceptive tax preparers.
Read DCA’s press
release on its citywide sweep of tax preparers to protect filers
from deceptively advertised services
Want to receive your tax refund faster? If you have a
bank account and file your taxes electronically, you can arrange for
direct deposit of your refund in as little as 10 business days. If
you don’t have a bank account, learn
about opening a NYC SafeStart Account
A Refund Anticipation Loan (commonly known as a RAL)
is one of the five loans you should
avoid 
