NEW YORK — Refund anticipation loans offered by tax preparation services may look tempting to the taxpayer who'd rather not wait for a check to arrive from the federal government. But most come with a big price — fees and a steep interest rate that can take a big chunk out of the money a borrower expects to receive.

Eric Davis, a substance abuse counselor in Chicago, said that a few years ago he was attracted by an ad in a tax preparer's window promising "half your tax money today."

It sounded good, so he signed up for it — without reading the fine print, Davis said.

"They never mentioned how much they were charging, but I probably paid close to $400" for the loan and preparation of a federal income tax form, he recalls.

He has since found a local credit union that offers low-interest loan programs and helps its members get free or low-cost tax filing help.

"My advice is, find a way to stabilize your finances and then just file your taxes and get back all the money you deserve," Davis said.

Workers like Davis used to have to wait to apply for refund anticipation loans until late January, when they got their W-2 forms detailing wages and the taxes withheld by their employer. But in the past couple of years, tax preparers have expanded the lending season by offering loans off workers' December pay stubs.

Both types of loans have drawn criticism from consumer advocates, who argue they target low-income families who can least afford to give up money from their tax refunds and earned income tax credits.

Two nonprofit groups that have studied the loans — the Consumer Federation of America in Washington, D.C., and the National Consumer Law Center in Boston — said in a recent report that refund anticipation loans cost 12 million taxpayers an estimated $1 billion in loan fees in 2004, the most recent data available, and that the pay stub loans likely have boosted that total.

"The working poor are very vulnerable to the loan pitches," said Chi Chi Wu, staff attorney with the law center. "Tax time is about the only time they see a chunk of money. They're pinched after the holidays and lured by the promise, 'Hey, you can get your money faster.' "

Refunds also can be reduced if the government withholds funds for past-due child support or to cover unpaid student loans, she pointed out.

Tax preparation firms argue that they are making the loans available because taxpayers want them.

One measure of this is that both H&R Block Inc. of Kansas City, Mo., and Liberty Tax Service of Virginia Beach, Va., lost thousands of customers last year to Jackson Hewitt Tax Service Inc., the Parsippany, N.J., company that originated the pay stub loan. Both H&R Block and Liberty have since introduced their own loans, which are underwritten by banking partners. Jackson Hewitt executives were traveling and not immediately available for comment, a spokeswoman said.

Bernie Wilson, vice president for business outreach with H&R Block, said the company's Instant Money Advance Loan, available since last fall, was designed as "a healthier choice" for workers who want early access to tax refund money.

The loans, although not directly secured by anticipated tax refunds, cannot exceed more than half the expected refund, he said. They carry a 36 percent annual percentage rate if the borrower opens a bank account with H&R Block and agrees to use a debit card to access the funds, he added. The rate is capped at 60 percent for those who choose a traditional paper process, he said.