The average tax refund amount was just over $3,100 last year.
For many Americans, that money can bring wonders: it could pay several months’ rent, be a downpayment for a car, or allow you to buy several shares of tech stock. And despite uncertainty at the Internal Revenue Service, that money can be in your bank account within three weeks of filing taxes online.
“Tax refunds are often the largest windfall for Americans, and many rely on this annual infusion of cash to make ends meet,” says Courtney Alev, consumer financial advocate at Intuit Credit Karma. “In fact, our data shows that 37% of American taxpayers depend on their refund to make ends meet, climbing to 50% of millennials.”
Tax software companies like TurboTax and H&R Block often lure users with the ability to get their tax refunds almost immediately as the IRS accepts their returns via refund advance loans. For the Americans eager for their money, that means could get it as soon as today—but you might not want to be so quick to take the bait.
These offerings often come with strings attached, says Jordan Rippy, professor of accounting at Johns Hopkins University’s Carey Business School. You could say the companies are trying to “get their claws” into consumers by connecting them with other products, she adds.
For example, with TurboTax’s Refund Advance program, consumers must open a Credit Karma Money account. Funds will be deposited there and accessed via a Credit Karma debit card. At H&R Block, consumers can access their loans via Spruce—H&R Block’s mobile banking app—or a prepaid debit card.
Even with these strings, however, the loans can be an asset for smart tax filers since there are typically no loan fees, 0% APR, and no credit score impact.
“There is no real danger for the consumer in this story, as long as they keep track of what they have, either intentionally or maybe aren’t as clear about what they have been signed up for,” Rippy says.
The pros and cons of a tax refund advance loan
For those expecting a large tax refund, having access to those funds sooner rather than later can be an enticing prospect. And for those who need the money, either for something like paying a bill or jumping on a business opportunity, patience can run thin. But before accepting a refund advance loan, it’s important to realize both the benefits and the risks.
The benefits
Money can be received quickly
Tax refund advances can cut weeks of waiting until just a few days or hours.
H&R Block advertises that “funds will be available the same day you apply for the Refund Advance loan. Like Jackson Hewitt, individuals must apply at a participating physical office. TurboTax says customers can access refunds in as little as 60 seconds after the IRS accepts one’s filing (though most have to wait about 15 minutes).
The IRS does not guarantee a timeline for tax refunds, but most taxpayers receive their money within the month of filing.
No interest or loan fees
Most tax refund advance loans do not have loan fees and have 0% APR—meaning there’s no interest owed on your balance. For context, the average personal loan interest rate is about 12%, according to Bankrate.
The risks
Hidden fees
When considering a tax advance loan, it is crucial to read the fine print. This is where, Rippy says, additional fees may hide and later catch you by surprise.
H&R Block, for instance, charges a $42 fee for those who choose to repay their loan via their refund transfer account. At TurboTax, individuals may be subject to additional fees as part of their Credit Karma Money account.
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Separately from an advance loan, TurboTax allows customers to get their refund 5 days before the IRS for a flat $25 fee.
Not a full refund
While TurboTax and H&R Block both advertise the ability to get up to $4,000 back sooner than normal, filers are not always able to get their full amount back early. At TurboTax, customers are only eligible to get up to 50% advanced. H&R Block says the eligible total depends on one’s “expected refund amount, eligibility criteria, and underwriting.” Both organizations only provide refunds in set amounts.
Not widely accessible
Tax refund advances are not necessarily available for everyone. Consumers ultimately have to be accepted for their refund loan via the lender, and the tax software companies have many stipulations for applicants.
For example, TurboTax users must receive a refund of at least $500, not live in Connecticut, Illinois, or North Carolina, and not file certain tax forms. H&R Block users must apply for the program by connecting with a tax professional, either virtually or in person.
Alternatives to a tax advancement loan
Luckily, there is more than one way to seek relief for those needing cash or a line of credit quickly. First, if you have an emergency fund, it might be time to use it to cover dire expenses. Once you receive your refund, replenishing or starting an emergency fund is a good idea and a common practice for many Americans.
“Take a look at your full financial picture to determine how to allocate your funds in a way that aligns with your financial goals for 2025,” Alev says. “My rule of thumb is to allot no more than 10-20% of your refund toward something fun and put the rest toward your financial goals, such as paying down debt or building an emergency fund.”
If your credit score is intact, a credit card with a 0% APR can also be a resource. Many cards have introductory periods of 12 to 15 months, allowing you to take on debt without immediate penalty. Just be sure to pay off your card right away once you get your return.
Personal loans are also options to obtain a few thousand dollars in cash to help you get by while you wait for your tax refund, but be wary of the interest you may incur. Overall, it’s important to weigh your options, and possibly consult with a financial professional, before making any major decision.
