The Montana Credit Union Network recently completed a project with REAL Solutions and our own Nancy Pierce about refund anticipation loans and the perception of those products in the industry and with consumers.
Refund Anticipation Loans (RALs) have been much maligned by a majority of the public except those who provide or use them. RALs are short-term loans (generally one to two weeks) secured by a taxpayer’s expected tax refund. They generally come with extremely high costs, often carrying triple digit Annual Percentage Rates (APRs).
Montana credit unions, such as Great Falls Teachers and Valley Federal, partnered with the local VITA sites to provide refund anticipation loans in 2009 and again in 2010. The whitepaper below is the summary of their efforts and what it takes to make a RAL program successful.