Wisconsin CUs Warn of Holiday Refund Loans

PEWAUKEE, Wis. – Wisconsin credit unions were warning consumers yesterday to be ware of a new short-term loan being marketed that often carries high fees and rates. So-called Holiday Refund Anticipation Loans are short-term loans that are secured by a taxpayer’s expected tax refund and marketed by tax preparation firms. The loans, warned the Wisconsin CU League, can carry excessive fees that translate into triple-digit annualized interest rates, with the consumer often unaware of the total cost. “If your refund is smaller than expected, you may not have the funds to pay back the loan, which could lead to more fees and eventually damage your credit,” said Brett Thompson, president of the Wisconsin league. He suggested that consumers consider one of the many credit union alternatives being developed through the REAL Solutions programs, such as credit union payday loans, that carry much smaller rates and fees.