how much earlier can they get

[Smallsteps]

So I just saw a commercial offering a tax refund anticipation loan based on if you bring in your pay stub dated after Dec 18th.
Touting you can have this money to spend for Christmas.....

Wow come on this has gotten insane i remember when they touted don't wait for your w2 just bring the earning statement / check stub but this IMO is pushing it.

[Jluke]

What’s a refund?

[disneysteve]

Those refund loans are ridiculous. The interest rates are often over 100% or even over 200%. When you get one of these loans at the time you file your taxes, you may only get the money 1-2 weeks earlier than you would have anyway so it's hardly worth paying that outrageous interest. But with this deal to get the loan the week before Christmas, you might not repay that loan for a few months. That interest is going to be even worse having the money out for that long.

STAY AWAY!

[bjl584]

Those are one step away from a Payday loan, and they should be outlawed.
I know someone who took on one of these.
I don't know details, but a large chunk of their refund (which he probably shouldn't have gotten in the first place) was wiped out

[james.hendrickson]

Those refund loans are ridiculous. The interest rates are often over 100% or even over 200%. When you get one of these loans at the time you file your taxes, you may only get the money 1-2 weeks earlier than you would have anyway so it's hardly worth paying that outrageous interest. But with this deal to get the loan the week before Christmas, you might not repay that loan for a few months. That interest is going to be even worse having the money out for that long.

STAY AWAY!

This. Excellent point DisneySteve.

[kork13]

Part of the problem is a marketing principle (based in psychology) that basically says that the first instance of any particular product/service that a person sees or interacts with becomes the first to come to mind when they actually need said product/service. So businesses always try to be the first place you see the kind of stuff you'll want later on -- christmas stuff in October, tax prep in December, grills & lawn mowers in February, and so on.

[Joan.of.the.Arch]

I tutor kids and tell them that the math they are learning will enable them to protect themselves from being cheated or deceived. I believe I will add this to my arsenal of examples.

[Smallsteps]

Part of the problem is a marketing principle (based in psychology) that basically says that the first instance of any particular product/service that a person sees or interacts with becomes the first to come to mind when they actually need said product/service. So businesses always try to be the first place you see the kind of stuff you'll want later on -- christmas stuff in October, tax prep in December, grills & lawn mowers in February, and so on.

The reason this seemed ODD to me was not the loan, they have had these for years and yes they are garbage terms.
The reason i was amazed was it is NOT for an item you will need later but NOW they are saying bring in a stub dated Dec18 or later and they will get you money NOW for Christmas.
This was the first time i saw this pitch to get money BEFORE the end of year.

[disneysteve]

The reason this seemed ODD to me was not the loan, they have had these for years and yes they are garbage terms.
The reason i was amazed was it is NOT for an item you will need later but NOW they are saying bring in a stub dated Dec18 or later and they will get you money NOW for Christmas.
This was the first time i saw this pitch to get money BEFORE the end of year.

I've never seen that either, though I can't say I pay attention to those ads. It doesn't surprise me, though. As I said, the interest rate on these loans is triple digits, up to 200% or more. The longer they can get you to carry that loan, the more they will make off of you.

There was another thread recently about credit card debt and the chart showed that every year, CC debt spikes at the end of the year because everyone charges their holiday spending, then dips down in the 1st quarter probably when people get their refunds. If you can now get your refund before Christmas, I wonder if that would flatten that spike. I guess it would if enough people get sucked into this disaster.

[Smallsteps]

I've never seen that either, though I can't say I pay attention to those ads. It doesn't surprise me, though.

i was getting my coffee in morning and was on the TV which i have news on for background while I get ready for work.
I only paid attention because the timing was out of place. Simply put I doubt that any of these payday loans or apps to get paid NOW or getting a expected refund before the year ends does anything except make the situation worse. The now now now theme and sense of obligation on gifts etc often have people overdoing it.
Much like any other item in life they can say NO. The people whom would do this, most likely do not have CC.

I think it is a disgrace that people seem to accept these items that only trap those already held back by zero personal finance skills or the ability to budget. Simply put i think a mandatory class on personal finance should be in high school before they can graduate.

In my area kids must do an ART project in high school outside of a class as one of the hoops they jump through but no one can balance a checking account or know how to file taxes...... i guess when they are homeless the graffiti will be aesthetically pleasing.

[disneysteve]

Simply put I doubt that any of these payday loans or apps to get paid NOW or getting a expected refund before the year ends does anything except make the situation worse.

Absolutely. Just like payday loans, these just suck people further into debt and encourage more spending money you don't have.

Simply put i think a mandatory class on personal finance should be in high school before they can graduate.

A personal finance class is part of the HS curriculum in our town but at least when our daughter took it, it was woefully inadequate, though I suppose something is better than nothing.

[james.hendrickson]

Absolutely. Just like payday loans, these just suck people further into debt and encourage more spending money you don't have.


A personal finance class is part of the HS curriculum in our town but at least when our daughter took it, it was woefully inadequate, though I suppose something is better than nothing.

Part of the problem is that basic financial education is inconsistently taught. In some states its a high school requirement, in some states it is an elective subject. Some states have exams on it, some don't.

I think at this point its up to non-profits and parent's to teach basic financial education. The finance industry isn't in the business of educating people and our decentralized education system doesn't always do a great job.

[disneysteve]

I think at this point its up to non-profits and parent's to teach basic financial education. The finance industry isn't in the business of educating people

Parents can't do it since most of them are clueless themselves.

I actually think the finance industry has a wealth of educational resources. Vanguard, Fidelity, Schwab, etc. all have all sorts of handouts, online tutorials, videos, and more to help teach yourself or your kids about personal finance. In fact, it is typically one of those companies that sponsors and provides the materials for the classes that are given in the schools.

[james.hendrickson]

Parents can't do it since most of them are clueless themselves.

I actually think the finance industry has a wealth of educational resources. Vanguard, Fidelity, Schwab, etc. all have all sorts of handouts, online tutorials, videos, and more to help teach yourself or your kids about personal finance. In fact, it is typically one of those companies that sponsors and provides the materials for the classes that are given in the schools.

Disneysteve - its true, they do some educational work. Frankly Schwab's analysts are pretty good, especially Liz Ann Sonders. That said, their PRIMARY organizational purpose is sales and investment returns, not human capital development or mass education.

[disneysteve]

Disneysteve - its true, they do some educational work. Frankly Schwab's analysts are pretty good, especially Liz Ann Sonders. That said, their PRIMARY organizational purpose is sales and investment returns, not human capital development or mass education.

I think it's in those company's best interest to educate people, though, as it creates more customers for them. If folks are living paycheck to paycheck and buried in debt, they don't have much use for Vanguard or Fidelity. Teach them to manage their money better, though, and they can get to a point where investing is something they can actually do.