APRs of > 300%, Rip-Off Artists, etc., etc.
Reader comment on: HSBC, H&R Block, and Refund Anticipation Loans
in response to reader comment: This "Analysis" is Not Even Close
Submitted by Britt the banker (United States), Jan 6, 2011 16:24
Regarding Clare CPA's comments, and to respond to others who consider H&R Block and HSBC as downright villains with these products, let me offer a slightly different point of view. I will illustrate by example:
Last month I had to attend a business meeting in Charlotte where I stayed overnight at the downtown Marriott at a cost of $244 (yikes, and that was with the corporate discount). If I were to write an anti-Marriott article saying, "those rip-off artists at Marriott charge $7,320 for one month's rent!" or "those shysters at Marriott charged me the same amount as a rich person pays for their mortgage payment on a $1.6 million dollar mansion!" the charges would seem pretty expensive. But the truth of the matter is that I only needed to spend one night there.
H&R Block disclosed that their average refund-anticipation customer enters into a $3,000 transaction which lasts 11 days and costs the consumer $62.14 (a $29.95 fee + $32.19 finance charges):
That's an annual percentage rate of 68.73% by my calculations. But the truth of the matter is that the average transaction lasts 11 days.
Ane more truth: My federal government withholds money from my paycheck all year for which I am paid zero percent interest. It creates tax laws which are so complex that the average person can no longer calculate their own taxes with confidence. And if you file your Federal Tax Return 60 days late, the minimum penalty begins at $100 (if you only owe $500 in taxes, that's an APR of 122% !!! ). It is the federal government who should be ashamed and held as villainous.
Fortunately we live in a society where the private sector can give us options in the form of, for example, Clare CPA, H&R Block, HSBC, and TurboTax. By cracking down on Block and HSBC, all the government has done here is to take one more option off the table for low-income families who wanted to pay $62 so they could use their $3000 tax refund a little bit sooner. Thanks, nanny-state!
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