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Easy Ways to Invest Your Tax Refund
Information for Buyers
For some of us, the happiest day of the year is the
day we get that special delivery from the mailman - our
long awaited tax refund! Part of you can see the 49"
HDTV shining in your living room, but the other part
knows that this is a big chunk of cash that you should
just invest.
Your first stop should be your credit cards. The
average refund is just over $2000, and the average
credit card interest is hovering around 14%. Ignore
that $2000 sitting on your credit card account, continue
to make the minimum payments of $50, and it will
take you 54 months and $1263 in interest to pay it off.
Pay it off when you go to deposit your refund check
and your FICO score gets a little boost, you get some
breathing room, and that money that you usually
spend on interest is now yours.
Savings is the second place you should be looking at when spreading the refund joy. We all know we should have three to six months worth of salary burrowed away for emergencies, yet the average American savings account holds under $4000 for six weeks, never mind six months.
Short term certificates of deposit are a great way to ensure that the money is actually saved. The funds are tied up to reduce temptation; you earn a higher interest rate, yet still have fairly easy access in times of need. Your $2000 refund can earn almost $700 in five years, and is always available to be used as collateral in lending situations.
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