It's tax-filing season, which means taxpayers nationwide need to beware of the one of the most unnecessary financial products: the refund-anticipation loan.

RALs are short-term loans — often at exorbitant interest rates — in the amount of an expected refund. Tax preparation fees also are often deducted. A "good" RAL might have an annual interest rate of 40 percent; a bad one can end up costing 10 times that much.

Thankfully, this might the last year taxpayers need to be warned. That's because the RAL industry is getting squeezed by federal regulators, who are cutting off bank funding to the biggest RAL lenders, and by the Internal Revenue Service, which is making it easier for tax filers to get refunds quickly and without usurious fees.

When combined with other charges — for providing the RAL in cash, or transferring it to a high-fee prepaid card — the cost of the RAL can approach loan-shark levels. During last year's tax season, Jackson Hewitt Tax Service Inc. was blocked from selling RALs after the Office of the Comptroller of Currency prohibited the company's bank from financing the program. In December, federal regulators similarly cut off RAL lending for H&R Block Inc., the nation's biggest tax-prep firm.

According to the Consumer Federation of America, the federal crackdown leaves just three small state-chartered banks — which are not federally regulated — to provide money for the entire RAL industry. Because these banks have limited capacity, volume will drop and the cost of fees paid by RAL borrowers will go up, the consumer group warns.

The IRS also has made RALs less appealing by processing direct-deposit refunds in less than two weeks, and some times in just a few days, for those who file electronically. Filers who request a paper check should expect to wait a lot longer, and that's why so many low-income tax filers, who often don't have bank accounts, turn to RALs.

Tax preparers unable to sell RALs to these consumers have turned to a new and equally fishy financial product: the Refund Anticipation Check.

A RAC is a temporary bank account into which the IRS direct deposits a refund check. Consumers access that money through a check or prepaid card. When the money is gone, the account closes automatically.

Consumers typically pay about $30 to set up the one-time-use account. If they opt to get a paper check, they could end up paying a check-cashing fee, too. If filers put the refund money on the prepaid card, they could get slapped with other use fees.

In 2009, about 12.9 million filers got refunds via a RAC, according to the Consumer Federation.

Through generally cheaper than a RAL, enrolling in a RAC program doesn't make a lot of financial sense, either. Consumers would be wiser to open an actual checking account and arrange to have a tax refund direct-deposited there.

Trouble is, many Americans don't want to have anything to do with banks. Often, there's no bank in their neighborhood, bank employees don't speak their language or they are simply unsophisticated about personal finance.

Starting this tax season, hundreds of thousands of such filers can get refunds quickly while managing to avoid both traditional banks and questionable financial products of the tax-prep industry.

Next week, the U.S. Department of the Treasury will mail letters to 600,000 low-income Americans offering them subsidized, low-fee debit cards. The cards come with no money, but so-called "unbanked" consumers can have their tax refund deposited directly on the Visa-branded cards.

The debit cards are part of a pilot program that could be expanded if it were successful. For now, only people who get invitation letters are allowed to participate. The Treasury is launching a companion program to encourage the nation's 1.7 million payroll-card users, who collect pay from their employers via debit card, to use the same cards to collect tax refunds.

Unlike RACs, the Treasury cards can be used for more than just receiving tax refunds. Monthly fees on the Treasury cards will vary from nothing to $4.95. All of the Treasury cards offer free ATM withdrawals at 15,000 participating locations; free online bill pay; and no-fee direct deposit of wages.

Cardholders pay no transaction fees on retail purchases in this country, though foreign purchase are subject to a 3 percent charge.

Both the Consumer Federation and the National Consumer Law Center this week praised the Treasury card program as a good alternative to RALs and RACs.