More short-term financing options to be shut down

American consumers are increasingly losing avenues to secure short-term financing, with the National Consumer Law Center and the Consumer Federation of American both predicting that the 2011 tax season will be the last one for Americans to acquire refund anticipation loans. RAL lending was already on the decline, with three major banks - JP Morgan Chase, HSBC and Santa Barbara Bank & Trust - being forced to stop offering the service in 2010. Now, only Republic Bank & Trust provides RALs to consumers, and after reaching a settlement with the Federal Deposit Insurance Corporation, will cease this lending service after April 2012. "RALs are bank loans secured by the taxpayer’s expected refund, and last approximately seven to 14 days until the actual tax refund from the IRS repays the loan," Accounting Today reports. "According to the most recent data from the IRS, approximately 6.85 million taxpayers applied for a RAL in the 2010 tax filing season (for tax year 2009)." With the elimination of RALs, consumers will now be looking to other sources of short-term financing, such as short term loans. This will significantly impact their credit decisions.