The 6 Smartest Things to Do With Your Tax Refund
The 6 Smartest Things to Do With Your Tax Refund
By Vance Cariaga February 13, 2024 GoBankingRates
Getting a tax refund can be exciting. It feels a little like getting a year-end work bonus in the middle of spring. Fun as it can be, it’s important to keep in mind that there are smart things you can do with that refund — and not so smart things.
Rather than blow the refund on something you don’t really need, you should put it to use in a way that can bolster your financial situation.
With the 2024 tax season underway, you might be looking forward to a refund from the IRS or your state tax agency. How you use it depends on your own personal situation, but here are six of the smartest things to do with your tax refund.
1. Pay Down Debt
If you’re carrying debt, one of the best things you can do with a tax refund is put it toward that balance. This is especially true of credit card debt, which carries high interest rates that keep carrying over to the next payment cycle when you don’t pay off the entire balance.
Credit cards can stretch out small purchases into ongoing loans by keeping borrowers on the hook for as long as possible, making minimum payment every month while they rack up interest charges.
If you don’t have any credit card debt to pay down, consider using the tax refund to get ahead on car or student loan payments. The extra cushion could come in handy in the future.
2. Open a High-Yield Savings Account
Tempting as it might be to splurge on luxuries with your tax refund, one of the smartest things you can do is put it in a high-yield savings account where it can grow. Even better? High-yield savings accounts are offering some of the best interest rates in years.
One of the top options is Milli Bank, a mobile bank with a savings account that pays 4.75% Annual Percentage Yield, as of Feb. 29, 2024. There are no monthly service fees or minimum balance requirements with a Milli account, and all deposits are FDIC insured.
Milli also offers a goal-oriented savings product called Jars. Milli Jars allow you to personalize your savings goals and set aside funds directly toward them, helping you visualize your progress. Opening a Milli account and growing your money faster with 4.75% APY is one of the smartest things you can do with your tax refund.
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