Basically, a refund anticipation loan is a short-term cash advance that uses your expected tax refund as collateral. The loans allow you get your money a little bit earlier, but at a hefty price. If it is worth $30 to $300 or so to receive your refund several weeks early, be sure to compare rates and to read the terms of the loan carefully.

An estimated 12.38 million taxpayers took out refund anticipation loans in 2004. These mostly low- and moderate-income taxpayers paid a total of more than $1 billion in fees for their easy money.

As an alternative, consider e-file and you will have your refund within weeks.
The IRS even has a program called Free File that allows taxpayers with an Adjusted Gross Income (AGI) of $52,000 or less in 2006 to e-file their federal tax returns for free.  That means 70 percent of all taxpayers – 95 million taxpayers – can take advantage of the Free File program.

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