As tax season gets closer you’re probably hearing lots of ads for tax refund anticipation loans. These loans give you money now that you normally receive after the U.S. Internal Revenue Service processes your tax return, if you’re entitled to a refund.

Sounds like a great idea, right? Especially if you have holiday credit card debt coming out of your ears.

What’s the catch? The interest rates. Some can be as high as 40 to 60 percent, according to the Better Business Bureau.

Taxpayers should keep in mind “when they file online they can usually get their refunds direct deposited in their accounts in 8 to 15 days,” says Steve J. Bernas, president of the Chicago BBB. So the time you save by getting a tax refund anticipation loan may not be that much.

The BBB offers these tips:

*Check out other IRS filing options available without additional fees and the probable waiting period for an expected refund check from the government.

*Realize that an RAL is a loan provided by a bank and must be repaid even if the refund it less than expected.

*Evaluate the cost or interest rate involved in the loan.

*Be aware that other businesses employ the tax refund anticipation loan concept because it attracts buyers. Consumers should evaluate this with the same scrutiny that they would use with any other RAL.

*Beware of a preparer who guarantees results or who bases their fees on a percentage of the amount of the refund.

*Choose a preparer who you will be able to contact should any problems arise.

It pays to be informed. Weigh the pros and cons carefully before getting one of these loans.

Published: Feb 1, 2008