What is a rapid refund? Rapid refunds, according to the commercials, are the way to go if you want to receive your tax refund on the spot for a small fee. It would be nice and all, but why would you need the money that fast?

Families whose situation requires them to live paycheck to paycheck may be interested in getting a rapid refund from popular tax centers such as H&R Block or Jackson-Hewitt. These companies will file all the paperwork associated with your taxes and then help you apply for their rapid refund program. Getting a wad of refund cash right away really is appealing when bills need to be paid and last weeks paycheck is already gone.

Although it seems so easy on the surface, rapid refunds are more complicated than that. In reality, they are refund anticipation loans, abbreviated RAL's. Just all loans, they bring with them interest and finance charges.

We've heard of refund anticipation loans as well. Most people hear those words and they think, "No, I don't want to take on a loan." But if they hear "rapid refund", they are on board. The reason is that people don't equate a refund with a loan. In our minds, one is better than the other.

The name has been changed because many people, after enrolling in a rapid refund program, felt that they had been tricked into accepting a loan they didn't want by false advertising. When this type of loan was originally offered, it was marketed mostly to individuals earning a lower income who were eligible for the earned income tax credit, or EITC, and the interest rate charged on it was outrageously high.

A family who really needed their tax refund right away was able to get it as a result of the rapid refund program. But, if the person applying for the rapid refund was not aware of the high charges they would be charged on the loan, and even if they paid as soon as possible, the extra they had to pay because of interest on their refund of a few thousand dollars was astronomical.

Something that not many people understood at that time is that electronic tax filing gets you your refund in just a couple of short weeks, which is still pretty fast. A tax preparer can complete the necessary forms on the IRS's website in your behalf, even if you don't have your own computer.

Those without a bank account can still file electronically and have a check mailed. The refund will return faster than the paper filing method. Credit unions are also an option for direct deposit in lieu of a bank. Credit unions require as little as $25 in share accounts to keep them open. These types of accounts are available through many workplaces, church affiliations, and other organizations.

There are more palatable options for receiving a quick refund other than taking out a refund anticipation loan. Consider all of them before signing on the dotted line.