Wednesday, April 6, 2011

Data on how Tax Day Loans Hurt the Poor

  • A typical tax refund loan carries an APR rate of 149
  • 7.2 million taxpayers used them in 2009, costing 606 million in fees, 58 million in additional charges
  • 64% of those who took these loans out were eligible for the Earned Income Tax Credit, a credit for low wage-earners
  • Their primary market, according to John Hewitt, CEO of Liberty Tax Service, is the 17 million Americans who do not have their money in 'traditional' banks
  • "Taxpayers living in extremely low-income communities are 560% more likely to use these loans"
  • Banks like Wells Fargo are closing traditional banks in these communities while they invest in predatory loan firms

  Statistics taken from Tax Day Temptation Full of Tricks and Traps by Bryce Covert New Deal 2.0

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