While many Americans fear April 15 as tax day the vast majority of citizens will be receiving a refund not pay more to Uncle Sam.
were 143 million tax returns filed with the IRS in 2011 and more than 80 percent
of them produced a refund. According to the IRS the average refund is nearly
While some refunds will go to a weekend getaway or a new appliance many Americans would be better off using their windfall to pay down their debt.
The average American household has nearly $15,950 in credit-card debt (in 2012), according to Creditcards.com. If you have high-interest debt, putting your tax refund check towards paying it off will likely give you greater returns than any other option. That's because when the balance on principal goes down, the interest (or finance charges) you have to pay on that debt also goes down.
In addition paying off older debt will allow you to likely qualify for a loan in the future should you need one.
debt collection on a severely past due account could make it difficult for you to get approved for
new credit and loans. It's one of the worst types of entries you can have
on your credit report
If you have a collection account on your report, it’s likely affecting your credit score, this is especially true for more recent collections. You can improve your credit score by getting these collection accounts deleted from your report or at least having them reported as “Paid” or “Current.”
The simple act of using your refund or even a part of the refund to pay off debt this year could save you hundreds of dollars in future finance charges.
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