For some people, tax time is a roller coaster ride of daily life, trying to find receipts and get all of the information you have from throughout the year compiled into one place. It can be trying for the most patient of people but alas, the job needs to get done.
Once the paperwork has been organized and the taxes finally filed, a sigh of relief can soon turn into a cry of joy when you find out that you are going to be getting some money back from the government. It is always good to get back rather than owe but many families will have spent that tax return money in their heads before even getting the money back. While it is good to make financial plans, being greedy about the money will cost you.
Refund anticipation loans will cost you big bucks. Sure you get your money the next day, or in some instances, as soon as you file. But many will not realize they are paying a huge interest rate for the convenience of getting their refund fast. Would you take a loan with a 250% interest rate? I think not! But by applying for an refund anticipation loan, you are essentially doing just that. Blinded by the reality of fast cash, they often miss out on reading the fine print, especially when the tax preparation offices are pushing the convenience.
So how can you avoid the high cost of fast money and save a bunch? There are other ways to get your money back faster without having to pay the interest.
Request to File Electronically
If you are doing your own paperwork or having a tax professional do it for you, request to have your returns filed electronically instead of submitting your paper forms. Filing electronically can get your money back to you in a few weeks, instead of the 8-10 week waiting period for filing on paper.
Request a Direct Deposit
If you file electronically, submit your bank information with your return to get your money back as a direct deposit instead of a check being mailed to you. A direct deposit refund will typically hit your account within 14 days of your filing. You can also request a direct deposit if you are filing your returns on paper. It will take a little long for the paper submitter to get the direct deposit but it will certainly be faster than waiting for a check in the mail.
Granted neither of the two above option is instant but they do not cost you anything additional. Having the full amount of your refund available is much more financially savvy than being hit with enormous fees. The trick here is to practice patience and not commit the money until you physically have it in your hands or your bank account.