If you’ve ever filed a tax return through a paid service, you were probably offered the option of a refund anticipation loan (RAL). These high cost loans allowed tax payers that were receiving a refund to get their check on the same day they file, minus the fees, of course.

The problem with RALs is that they fall under the guise of predatory lending. It’s for this reason that the RAL is no longer allowable by federal law. The military outlawed its use several years ago and may states have been fighting against the use of this type of loan for years as well. Now, this type of loan is no longer available.

Some naysayers warn, however, that another bad practice is being put into place to help companies recoup the loss of income that the RALs provided. The new option is called a refund anticipation check (RAC).

While the term RAC may imply that a check is given to the taxpayer in lieu of waiting for a government check, in actuality it’s the establishment of a bank account and/or a debit card to which the deposit can be made. The benefit to this practice is that taxpayers without a bank account can have their checks direct deposited into their account rather than waiting for a paper check to arrive from the IRS.

There are usually a number of fees associated with an RAC. The base cost can be around $30 to establish the bank account and debit card, but they can well exceed $400 when you include the fees applied by the tax preparer. This can often times mean that an RAC is not the most affordable option for receiving your tax refund.

The question that people have is are RAC’s necessary. The consensus of opinion from both the US Treasury Department and the leading tax experts is no. You can save money by filing your taxes through the IRS for free. This can save you anywhere from $30 to several hundred dollars for the help of a professional service. In addition, there are many low cost direct deposits (prepaid debit cards) that will allow you to have your money deposited directly without additional fees.

It’s always tempting to want to have your money as quickly as possible. For many people, millions of people in fact, an RAC seems like a good deal. However, when you figure in the fees as well as the fact that can receive your return through electronic filing just as fast as you would receive your money through a RAC, then the choice is rather simple. You can save money and have your return quickly and conveniently either with no expense or much less of an expense than you would with a RAC.