|CONSIDER THIS: Tax Refunds as a Debt Solution|
|News Releases - Business, Economy & Finance|
|Written by Emily Caropreso|
|Wednesday, 06 February 2013 10:04|
38.8% of Iowans Surveyed Plan to Pay Down Their Debt with Their Tax Refunds
CONSIDER THIS: Tax refund time is just around the corner, and many Iowans are eager to pay down their debt. Last year, the IRS issued more than 104 million refunds totaling $282 billion. For many Americans, their tax refund represents one of the most substantial debt payments they will make all year.
According to a survey of 890 Iowa credit union members conducted by the Iowa Credit Union League (ICUL), 38.8% of respondents plan to use their refund to pay down existing debt in 2013. Similarly, 36.8% of respondents said they plan to save their tax refunds in 2013. Only 4.1% of Iowans are using their tax returns for large purchases, while a small number have designated the funds to start a new business (0.7%).
Many financial experts suggest using a tax refund to establish an “emergency fund” for those who do not already have one. Keeping these funds separate from a regular checking account will discourage spending, and a savings component allows individuals to access funds that can help them avoid going into debt.
The IRS has made it easier to save your tax refund for a “rainy day” by allowing recipients to have the refund split up and deposited in up to three different accounts. This gives consumers the option to earmark portions of their refund for spending and/or saving.
ICUL suggests using a tax refund for one or more of the following:
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