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Last year, my first post was yelling at people not to get a refund anticipation loan (RAL). The basic reason is that the annualized interest rate on such loans can be as high as 250%. Well, it seems that Jackson Hewitt has decided that RALs just aren’t the end-all-be-all. On my home from work, I spied a billboard touting….wait for it….. loans based upon your last paycheck. It’s not even W-2 based. Based on your paycheck stub and that’s it. They do calculations and estimate your tax refund and give you a “loan” for that amount.

Amazing. Soon, you’ll be able to get a loan in February based upon withholding just for January. Or, why wait that long? They could tell you what to withhold and give you a loan based upon the estimated tax refund for the year.

You’re probably wondering what happens if you get your loan and go somewhere else for tax return prep, right? Well, they’ve got that covered.

When you are approved for a Money Now Loan, there is no out-of-pocket payment required for tax preparation because all fees will be deducted from your loan proceeds

But of course, the “fees” (interest) you pay will be based upon the full amount of refund, not the amount less tax prep fees.

As these tax prep firms continue to prey upon those that are not fiscally literate, I will continue to point out the abuses. The Pentagon has banned RALs for troops along with other high interest rate loans because of the effect that it can have on troops. Maybe it’s time to do the same for all other Americans?