'Tis the Season--ALREADY

We normally associate tax season with April, not Thanksgiving or Christmas. But just as Christmas music displays seem to appear in department stores earlier and earlier every year, tax preparation companies have jumped the season on refund anticipation loans. As early as November, consumers could get "holiday" loans using their paystub showing their year-to-date earnings and withholdings to estimate their tax refund. The National Consumer Law has issued a report on these loans. The fees on these loans, and the marketing efforts, vary widely between leading preparers such as H & R Block and Jackson Hewitt. My chief complaint with these loans is the number of people receiving the Earned Income Tax Credit who borrow funds this way. RALs are very high cost loans, and the effect of taking one out is to reduce dramatically the economic benefit of receiving the EITC.