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Secretary Perez Advises Against High-Cost Stimulus Anticipation Loans

 

Advance loans on stimulus checks will likely come with high costs

BALTIMORE (3/13/08) – Department of Labor, Licensing and Regulation Secretary Thomas E. Perez and Financial Regulation Commissioner Sarah Bloom Raskin reminded Marylanders to beware of high-cost anticipation loans on the federal economic stimulus payments that will be sent to more than 130 million households nationwide beginning in May. The Commissioner has issued an advisory reminding Marylanders to be smart and avoid giving their money away.

Much like the refund anticipation loans offered by tax preparers and lenders that proliferate each year during tax season, stimulus payment anticipation loans are expected to be sold as a way to receive the tax rebate early. As part of the recently approved federal economic stimulus package, eligible persons will receive up to $600 ($1200 for married couples), and parents will receive an additional $300 for each eligible child younger than 17. Anticipation loans typically impose excessive interest rates resulting in a very high cost for the loan.

“The rebates are intended to boost the economy by putting money into the pockets of hard-working people, not to provide a windfall for lenders and tax preparation companies,” Secretary Perez said. “Taxpayers should avoid the temptation offered by these loans, because they will only cost the borrower in the end.”

“A borrower could end up paying hundreds of dollars or more just to receive a stimulus payment a little earlier than they would otherwise receive it,” Commissioner Raskin said. “A costly anticipation loan is not the best way for a taxpayer to obtain his or her payment early.”

The quickest way to obtain your rebate is to remember to file your 2007 tax return, and opt for direct deposit to your checking account. Your stimulus rebate payment will be made by direct deposit as well. Those who receive their tax return checks by mail will also receive their rebate by mail. For more information on the stimulus payments, visit the IRS website. View the Commissioner’s advisory.

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