If youâre thinking about a âtax refund loanâ to cover the holidays, the version you can get in December costs about 36% APR. Wait until January and H&R Block can lend you up to $4,000 against the same refund at 0%.
Thatâs the whole story. The month you borrow sets the price.
Two loans, one refund
Jackson Hewittâs Early Tax Refund Advance opens December 10 at select locations and runs through January 31. You bring a recent pay stub and a photo ID, a tax pro estimates your refund, and if First Century Bank approves you, you leave with $300, $500, $1,000 or $1,500. The APR is 35.99%.
The page sells it as âthe happiest holiday loan.â It also says the most common amount approved is $300. To get the full $1,500, your expected federal refund, after fees, has to be at least $5,000.
H&R Blockâs December product is the Emerald Advance: up to $1,750, offered November through December, at a fixed 35.9% APR, due in full by March 31. Miss that by 14 days and thereâs a $30 late fee on top of the interest.
Then January arrives and H&R Blockâs Refund Advance opens: up to $4,000, âNo loan fees, 0% APR,â repaid from your refund. Itâs for people who file with an H&R Block tax pro, so the tax prep bill is still yours.
Translation: the 36% loan is the price of not waiting a few weeks.
The math the ad doesnât run
Jackson Hewittâs own example says $1,000 costs $65.08 in finance charges. That figure assumes the loan is repaid in 66 days, which the company calls the average.
Hereâs the catch. If you claim the Earned Income Tax Credit or the Additional Child Tax Credit, the IRS says it canât send your refund before mid-February. That hold covers your entire refund, not just the credit. The IRS says most early filers in that group get paid by March 2.
Borrow $1,000 on December 10, get your refund March 2, and thatâs 82 days of interest. At 35.99%, we estimate about $81. On the $1,500 loan, about $121. Interest stops after 120 days, so a stuck refund caps out near $177 on $1,500.
An Emerald Advance of $1,000 taken December 1 and paid off March 2 runs roughly $89 at 35.9%.
None of that comes out of your pocket up front. It comes out of your refund, which is why it doesnât feel like interest. It is.
What to do
If you can make it to January, wait. Then ask for the 0% product by name and confirm in writing that thereâs no loan fee.
If you canât wait, borrow the smallest amount that solves the problem. $300 at 35.99% for 82 days is about $24. Paying for a gift with a loan isnât dumb. Paying $121 to get your own money almost 12 weeks early often is.
Before you sign, price the alternatives. A federal credit unionâs payday alternative loan is capped at 28% with a $20 fee. Run any quote through our loan calculator, and compare bigger amounts on our best personal loans page.
Whatever you pick, ask what the tax prep will cost before anyone starts your return. That fee also comes out of your refund, and it isnât in the APR.
The detail
Jackson Hewittâs early advance is made by First Century Bank, N.A., and its page says the finance charge doesnât apply to residents of Connecticut and Nebraska. H&R Blockâs loans are made by Pathward, N.A., and are deposited to an Emerald Card or Spruce account. Both companies say applying wonât affect your credit score. Our interest figures are simple-interest estimates at the stated APR. The lenderâs actual charge depends on the day your refund lands.
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