Tips for Using Your Tax Refund to Pay Off Debt

How to Efficiently Tackle Debt with Your Tax Refund

For some people, filing taxes this season isn't all bad. Many filers have submitted their returns only to learn that they've got a refund coming their way. If you're anticipating a tax refund, you may be tempted to spend that money on something fun, or on something you've been trying to save for over many months, like new furniture. But instead, it's a smart idea to use those funds to better your financial situation.

Consider a Balance Transfer

36% of filers with a tax refund plan to pay off debt with that money, according to data from Assurance. If your tax refund will help eliminate a big chunk of your debt, then consider transferring your various credit card balances onto a single card with a 0% introductory APR.

Look at a Personal Loan

If your refund will only work to eliminate a portion of your debt, then a personal loan could be a better bet than a balance transfer. A personal loan offers a fixed interest rate on your debt so your monthly payments are predictable. It could be more optimal if you're left with a large balance post-refund.