Maximize Your Refund

Maximize Your Tax Refund

The only thing better than getting your taxes filed and out of the way for the year is knowing that a tax refund is headed your way. It can be tempting to conjure up ways to spend that money - a quick trip to Vegas, a new gaming system, a fancy new outdoor pizza oven, or the ever-popular shopping bonanza.

But we would be doing a grave injustice if we did not suggest you use a little more caution with that money. Last year, the average tax refund was $2,753, and many people are seeing higher returns this year due to changes the IRS made to counteract inflation. While that amount may not seem like a windfall, it could be enough to right the wrongs of your financial situation. If you're not sure how to optimize your return, consider two important options - debt consolidation and savings.

Tackle Debt

While this may be a less exciting alternative to booking a weekend vacation, paying off credit card debt is a crucial step toward creating a healthy financial picture. Put your refund towards the credit card balance with the highest interest rate—this is the card costing you the most in the long run. The benefits of paying down debt are two-fold: freeing up funds that would normally go towards high interest, plus giving your credit score a boost.

Build Your Savings

How prepared would you be in an emergency? If the mere thought is stress-inducing, you are not alone. Over 57% of Americans are unable to handle a $1,000 unexpected expense, and 81% of Americans did not increase their emergency fund last year at all.

When creating an emergency fund (or even just saving money for a rainy day), you can deposit a percentage of your tax refund into a designated savings account and set up automated weekly or monthly deposits. Even regular contributions between $50 and $100 add up over time, and when the unexpected happens, you will be less likely to rely on credit cards. 

You should also consider investing in a certificate of deposit (CD). This is a type of savings account offered by banks and credit unions where you agree to keep your money in the CD without taking a withdrawal for a specified length of time. In return, you earn interest on that sum in the form of an APY percentage.

Another way to save is to open an insured money market account. This is a high-yield savings plan with no fees or early withdrawal penalties. A money market account (MMA) is a type of deposit account that allows you to earn interest on your funds, while also providing easy access to your money if needed. Money market dividends are earned daily and paid monthly. There are no penalties for accessing your money market funds early; even the interest that you earn can be withdrawn once it's posted to your account!

Telhio Credit Union members have many savings options, as well as debt consolidation options, at their disposal. Access these benefits, along with many more services at