Credit unions that help their members prepare and file their tax returns and then deposit their refunds in credit union accounts, are helping the members avoid losing millions of dollars in so called refund anticipation loans.
According to the Consumer Federation of America and the National Consumer Law Center, low and moderate income tax payers lost roughly $800 million in different fees associated with the loans.
The loans work in a similar fashion to payday loans in that a third party tax preparer, often but not always a major firm, helps the member prepare and file a tax returns for a fee and then provides the member with cash immediately as a loan based on that return again for more fees.. The loans generally last for between a week and two weeks, the consumer advocates said.
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