High-Cost Loans Among the Unbanked

High-Cost Loans Among the Unbanked

Using tax filing data, this fact sheet demonstrates dramatic behavioral differences among the banked and unbanked in their use of two at-times costly tax-time financial products, refund anticipation checks (RACs) and refund anticipation loans (RALs). Banked tax filers are much more likely to avoid such products. Even for those who are otherwise similar in income and background, the banked are 57 percent less likely to use a RAC and 83 percent less likely to use a RAL. Such evidence may suggest the need for broader strategies that encourage savings and target the asset side of the household balance sheet.

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