With credit card interest rates going up, you may be considering an advance on your tax refund. Called a tax refund anticipation loan (RAL), this is not exactly an advance, but a loan, and millions of people are signing up.

It may seem like easy cash fast, but you should know about the pitfalls before you head over to H&R Block, Jackson Hewitt or anyone else.

First, what is a tax refund anticipation loan?
It’s a loan extended to you based on your pay stub.
Tax preparation companies make an estimate of your future tax refund based on the amount you make and the amount of tax you pay as disclosed on each stub. So, if the tax preparer makes a mistake, you may be unable to repay the loan when your real tax refund arrives. More important, this may be the most expensive loan you’ve ever gotten.

One borrower featured in a recent news article from the Atlanta Journal Constitution took out a “$234 loan, paying $66 for the money —- or about a 350 percent annual interest rate, assuming the loan is paid back in about a month.”

If this isn’t enough to convince you to think twice, the California Reinvestment Coalition put together some warnings about RALs.
• If you cannot pay back the RAL, the lender may send the account to a debt collector.
• The unpaid RAL can also affect your credit rating.
• If you apply for a RAL from a commercial preparer the next year, that refund gets grabbed to repay the current year’s unpaid RAL debt.

We'd like to hear from you, have you taken out a RAL? How much did you pay for your loan? How was your experience?