Taxpayers Plan to Put Their Refunds to Good Use: How About You?

Photo by William Potter / Shutterstock.com

What will you do with your tax refund?

If you’re like the average American who will receive a refund — and knows what they want to do with it — you will most likely put it in savings, according to a recent GOBankingRates survey.

The website polled 1,000 people about what they plan to do with their refunds. Survey participants had to choose one of the following seven options:

  1. Pay off debt (loans, credit cards, etc.)
  2. Splurge on a purchase (TV, shoes, etc.)
  3. Put the money toward a vacation
  4. Put the money in savings
  5. Make a major purchase (car, home, etc.)
  6. I do not receive a tax refund
  7. None of the above

About half of survey participants do not receive a refund or selected “none of the above.” GOBankingRates explains of the latter, “These people might not have a clear plan for their IRS tax refunds, they aren’t sure they will get a refund this year or they have plans for the refunds that are not found in the other responses.”

GOBankingRates’ analysis focused on the first five options. Among survey respondents who expected to get a refund, putting the money in savings was the most common response.

As we explain in “Tax Hacks 2017: 9 Smart Ways to Spend Your Tax Refund,” putting your refund in savings is also one of the smartest things you can do with it. This might mean using the money to:

  • Fatten your emergency fund
  • Save for retirement
  • Save for college

Unless you want to use the money to buy stocks or another higher-risk — and higher-yielding — investment, putting the money in an interest-bearing account will help you make the most of your refund by allowing it to grow.

Ideally, you’d put the money in a compound interest-bearing account. As we explain in “Money Lingo You Need to Know for Financial Survival“:

Compound interest is interest that’s earned and added to an account balance so that the interest, too, earns interest. Compounding speeds up earnings because, as your account balance grows, each new interest payment is based on a larger amount.

If you know which account you’d put your refund in and how much interest the account earns, you can use the U.S. Securities and Exchange Commission’s compound interest calculator to see how much your refund stands to grow.

If you’re in the market for a new interest-bearing savings account — or one that earns more than your current account — visit the “Find a Higher Paying Savings Account” page in our Solutions Center. There, you can search based on the type of account you’re looking for — checking, money market or certificate of deposit.

So what is it you plan to do with your refund? Let us know below or over on our Facebook page.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
Can My Wife Use My Social Security Benefits While Letting Hers Grow?
Can My Wife Use My Social Security Benefits While Letting Hers Grow?

Your self-discipline in not uttering three little words helps determine whether you can use a key claiming strategy.

13 Affordable Products for a Better Night’s Rest
13 Affordable Products for a Better Night’s Rest

These Amazon products can help you finally catch 40 winks — or more.

Half of All Retirees Say They Fear This
Half of All Retirees Say They Fear This

Chances are good that you share this fear. Here’s a way to overcome it.

Big-Ticket Things You Should Never Buy
Big-Ticket Things You Should Never Buy

In this week’s podcast: Are you wasting big money on these common purchases?

7 Big Purchases You Should Never Make
7 Big Purchases You Should Never Make

Sometimes a big-ticket purchase is nothing more than a big waste of money.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
10 Things Frugal People Never Buy
10 Things Frugal People Never Buy

If you’re a true tightwad, the mere thought of spending money on these items gives you the willies.

10 Useless Purchases You Need to Stop Making
10 Useless Purchases You Need to Stop Making

You might as well flush your money down the loo if you spend it on these things.

7 Social Security Benefits You May Be Overlooking
7 Social Security Benefits You May Be Overlooking

There’s more to Social Security than retirement benefits.

7 Social Security Rules Everyone Should Know by Now
7 Social Security Rules Everyone Should Know by Now

Confusion over Social Security is a shame, considering how many of us will need this money badly.

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

They don’t make coffee makers like this anymore.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

14 Things You Should Stop Buying in 2021
14 Things You Should Stop Buying in 2021

These convenient household products come with hidden costs that you might not have considered.

The 6 Best Investing Apps for Beginners
The 6 Best Investing Apps for Beginners

If you’re looking to ease into investing in the coronavirus economy with just a little money, check out these easy-to-use tools.

Is Writing a Check Still Safe?
Is Writing a Check Still Safe?

Every time you pay by check, you hand your bank account numbers to a stranger.

8 Things You Should Replace to Improve Your Life Today
8 Things You Should Replace to Improve Your Life Today

Being frugal isn’t smart if you put off replacing these items.

6 Ways to Protect Your Retirement Accounts From Hackers
6 Ways to Protect Your Retirement Accounts From Hackers

Imagine having $245,000 stolen from your retirement account — and not being reimbursed.

9 Mistakes People Make When Cleaning With Vinegar
9 Mistakes People Make When Cleaning With Vinegar

Cleaning with vinegar can save you a lot of money, but using it like this can cost you.

13 Amazon Purchases We Are Loving Right Now
13 Amazon Purchases We Are Loving Right Now

These practical products make everyday life a little easier.

7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

7 Income Tax Breaks That Retirees Often Overlook
7 Income Tax Breaks That Retirees Often Overlook

Did you realize all these tax credits and deductions exist — or that they apply to retirees?

4 States Where Taxes on Social Security May Fall Soon
4 States Where Taxes on Social Security May Fall Soon

These states are considering reducing — or even eliminating — income taxes on Social Security benefits.

10 Things Successful Retirees Do Differently
10 Things Successful Retirees Do Differently

These habits and characteristics can help put you on the track to success.

7 Hidden Sections of Amazon Every Shopper Should Know
7 Hidden Sections of Amazon Every Shopper Should Know

These little-known departments of Amazon are gold mines for deal-seekers and impulse shoppers alike.

7 Costly Health Problems That Strike After Age 50
7 Costly Health Problems That Strike After Age 50

As we age, our bodies wear down. Here is how to cut costs associated with some common ailments.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.