Have you ever taken a refund loan on your tax return? This option is heavily pushed by tax-preparation chains like H&R Block and Jackson Hewitt. About 12 million Americans go for this option every year. There are a couple of reasons why this is not a Clark Smart decision. First, you have to understand that the government is not giving you something when you get a refund on your taxes. You're the one who gave the government an interest-free loan all through 2007 by having too much withheld out of your paycheck. Second, the big tax-preparation chains will charge 100s of percent interest on the refund loans. So you're paying to get your own money back that you shouldn't have given to the government in the first place!

Many people use their tax refunds as a way to force themselves into saving money. But Clark recommends instead that you reduce your tax withholding to be even-steven. Then contact your credit union (or ING Direct, Emigrant, etc.) to set up automatic deductions for that exact windfall every pay period. The end result is that you'll build your savings and earn interest all year. Meanwhile, the IRS is seriously considering banning refund loans. But their motive is not to protect taxpayers. Rather they discovered that tax-preparation chains have been falsifying taxes to generate larger returns and more profit for themselves when they make refund loans. After the IRS announced its intentions, Jackson Hewitt lost around 25 percent of their stock value in a day. As if you needed something else to convince you that refund loans are a bad idea!