Who Needs Credit at Tax Time and Why: A Look at Refund Anticipation Loans and Refund Anticipation Checks

Research Report

Who Needs Credit at Tax Time and Why: A Look at Refund Anticipation Loans and Refund Anticipation Checks

Abstract

Refund Anticipation Loans (RALs) and Checks (RACs) are controversial financial products used by one in seven tax filers. This report presents findings on many of the most important individual and geographical characteristics influencing RAL/RAC use, as well as, insights about product use from tax preparers, RAL/RAC lenders, RAL/RAC tax form software developers, low-cost RAL lenders, and Volunteer Income Tax Assistance (VITA) program sites. The results suggest that factors such as lack of interest income, geographic location, EITC receipt, filing as a head-of-household, income, and living in a poor neighborhood, each independently contributes strongly to RAL/RAC use.

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