Illinois Bill Seeks to Reform Refund Anticipation Loans, Partnerships May Offer Alternative

April 6, 2005 - 12:00am
A bill introduced in the Illinois Senate will regulate the cost tax refund anticipation loans by limiting them to an interest rate of 36 percent. Sponsored by Sen. Jeffrey Schoenberg (D-Evanston) and endorsed by Attorney General Lisa Madigan, the bill would protect lower income borrowers and Earned Income Tax Credit (EITC) recipients from paying exorbitant fees to borrow what is essentially their own money.

Low cost tax preparation and refund services are one possible way credit unions can reach out to new lower income members. Currently, Northside Community Federal Credit Union hosts a tax preparation site organized by the nonprofit Center for Economic Progress. Tax refunds also make a great initial deposit for a new share account and allow taxpayers to have their tax refunds, which for EITC recipients may be as much as $3,000, direct deposited quickly and safely.

Link to the today’s Chicago Sun-Times article by Mary Wisniewski Bill designed to kill off tax refund loans.