PAULSBORO, N.J. — Low-income working parents pay an estimated $960 million annually to tax preparers and banks to speed the payment of federal Earned Income Tax Credit payments, according to the Association of Community Organizations for Reform, an advocacy group for the poor.

As a result, the EITC — which raises the incomes of millions of families above the official federal poverty line — is not helping needy families as much as it could.

During the 2005 filing season, nearly one-third of EITC recipients used either costly refund anticipation loans or less expensive refund anticipation checks to gain faster access to the money. In some cities, including Jackson, Miss., and Memphis, Tenn., more than half the EITC recipients paid for these services.

Jordan Ash, who works for ACORN's financial justice project, thinks tax preparation firms could help curtail use of these expensive loans if they provided more disclosure to taxpayers who often don't understand what they are paying for.

"It's a product that is solely to make money from low income families," said Ash.

Many consumer advocates don't think it would be constructive to enact a complete ban on the loans because some tax filers are in dire financial conditions, perhaps facing eviction or needing money for lifesaving prescription medicine.

Even so, there are other short-term options for handling unpaid bills. Nina Olson, the IRS taxpayer advocate, said a tenant behind in his or her rent might show the landlord documentation of the expected refund with a promise to pay once the money is received. Paying the minimum on a credit card balance for one more month and the associated interest fees also might be less expensive than a refund anticipation loan, she said.

In southern New Jersey, Germaine Williams paid $304 to have her taxes professionally prepared this year. That included a fee to create a temporary bank account into which the Internal Revenue Service will electronically deposit more than $3,000.

The firm that prepared her tax return will, in turn, issue Williams a check after the money is deposited. Then the tax preparation service will close the account.

"It will pay my rent for a couple of months and all my bills," said Williams, a single mother of four who was homeless a year ago and only earned about $10,000 last year. She would have preferred to have her refund on the spot when she had her tax return prepared Jan. 15 because she's behind in her rent.

Williams, however, did not qualify for a costly refund anticipation loan that can carry sky-high interest rates of more than 100 percent. Tax preparation firms typically disqualify loan applicants who don't have enough cash or a credit card to pay the up-front cost of preparing their tax returns.

Instead, Williams was charged for what consumer advocates describe as a "refund anticipation check."

Consumer groups say both of these financial products prey on the working poor, but the refund anticipation check is less onerous and preferable to the alternative.

Typically, the extra fee charged for these temporary bank accounts is about $30, according to Chi Chi Wu, an attorney for the National Consumer Law Center. In comparison, the refund anticipation loans add an additional cost of as much as $100.

Wu said low-income tax filers without bank accounts should, instead, find a local organization that does free tax preparation and can offer help in setting up a permanent bank account.

Roy Grimes, who had his tax return prepared in the same tax office minutes before Williams had hers done, said he would have been charged a total of $650 in fees if he opted for a refund anticipation loan. As it was, he paid $293 for tax preparation.

The 26-year-old office worker from Paulsboro, N.J., decided to wait a couple of weeks to get his $3,500 refund from the IRS, which includes about $1,300 from the EITC he will receive because he has a 4-year-old daughter.