This blog is for educational purposes only, not an offer of credit or advertisement for current loan terms. It does not provide legal advice. Refer to our loan web pages or consult professional advisors for specific information.
No one—apart from CPAs—likes having to file taxes. For many people, though, there’s a reward once they file —a refund.
In 2024, the average tax refund was $3,004. It’s the kind of money that can pay off loans and help you make big-ticket purchases. You can probably think of a few ways to use that money yourself.
Instead of spending that money on impulse buys, consider putting your tax refund to work. You can use that money to improve your financial health, invest in your future, or simply give yourself more stability.
Below, we’ll discuss our recommendations for five smart ways to use your tax refund and how MIDFLORIDA Credit Union can help you make the most of your money.
Open a savings account at MIDFLORIDA Credit Union today!
1. Pay down debt
The top way to use your tax refund is to pay outstanding debt.
Debt could include:
- Credit card debt
- Loans
- Medical bills
Paying down the debt or making a significant payment can help you save hundreds of dollars in interest and put the money toward your other financial goals.
Paying multiple debts
You might wonder which one to prioritize if you have more than one debt.
Consider using one of these debt payment strategies:
- Snowball method: Pay off the smallest debt first, then the next smallest debt. This can give you some quick wins and make managing your debts simpler.
- Avalanche method: With this strategy, you’ll focus on paying off your debt with the highest interest rate. This can save money in the long run.
2. Build up Your Savings
If you don’t have any debts, use your tax refund to build up your savings.
By putting money into your savings, you can:
- Protect yourself from unexpected emergencies
- Save for a planned upcoming expense
- Earn interest and make your money go further
What are the best accounts for your savings
A typical savings account, like the MIDFLORIDA Credit Union Regular Savings account, is always a good place to keep money you’ve set aside.
However, it isn’t the only type of savings account.
High-dividend savings accounts
Once you’ve built up your savings, you’ll want to look into a high-dividend savings account like the MIDFLORIDA High Five Savings account.
A high-dividend savings account gives you a much higher interest rate than a regular one.
However, they also have a higher minimum initial deposit requirement. For instance, you’ll need $100 to open a MIDFLORIDA High-Five Savings account.
Holiday Club accounts
If you’re saving for a planned expense, like a summer vacation or Christmas shopping, consider MIDFLORIDA’s Holiday Club account.
When you open the account, you can deposit money but won’t be able to withdraw it until a specified date.
With the MIDFLORIDA Holiday Club account, the funds will be transferred to your regular checking account on the specified date, allowing you to use them for holiday expenses.
3. Fund your goals
You can also use your tax refund to save for financial or life goals. These can be as small as a family vacation or as large as your retirement.
Other financial goals include:
- Furthering or continuing your education
- Purchasing a new car
- Saving for a down payment on a house
- Paying for a wedding
- Renovating your home
4. Save for your child’s college
You don’t just have to save for your future; you can also use your tax return to help your children pay for their college expenses.
If you decide to put your tax return toward your child’s college tuition, don’t use a regular savings account. Instead, open a MIDFLORIDA Coverdell Educational IRA.
With this MIDFLORIDA account, you’ll be able to:
- Make deposits at any time
- Grow your money tax-free
- Make tax-free withdrawals for educational expenses
5. Treat yourself
Treating yourself might not seem like a wise way to spend your tax refund.
In truth, though, it’s one of the smartest moves you can make. You might feel deprived if you don’t spend any of your tax return on yourself. That means you’ll be less likely to put money aside the next time you get a windfall.
Set aside about 10% of your tax refund to spend any way you like, whether toward a hobby, a big purchase you’ve been eyeing, or a fun day out.
Make the most of your tax refund with MIDFLORIDA
When you get a tax refund, you probably have several ideas about what that money can buy. Instead of spending it all, however, use that money to get ahead financially.
If you have any debts, use your tax refund to pay them off. You can also use your tax refund to build up your emergency fund or save for a financial goal, including paying for your children’s college expenses.
Don’t forget to set aside some of it to treat yourself for using the rest of it so well.
If you want to put your tax refund to its best possible use, open a MIDFLORIDA Free Savings account today.
Not only will you get a place to put your tax refund while you figure out how to use it, but qualifying new members can also get a $200 bonus 1. You can add that money to your tax refund and use it to set yourself on the path to financial success!
1. Offer valid as of February 1, 2025, and may be canceled at any time. MIDFLORIDA Credit Union membership and eligibility requirements apply. Paper statements are not routinely provided for Free Checking accounts. See associate for details regarding fees and terms. Minor accounts excluded. To qualify for the incentive, you must open a new Free Checking account online or at any MIDFLORIDA branch with direct deposit ($500 cumulative which must post within 60 days of account opening; Cash transfer app deposits do not qualify); accept and open online banking, eStatement, and a debit card; and complete 5 debit card purchase transactions which must post in one calendar month (to be completed within the first 60 days of account opening). No dividends are paid on Free Checking. Annual Percentage Yield is 0.00%. Limit one incentive per Social Security number. Past checking account holders and previous recipients of checking account incentives are ineligible. The incentive will be deposited to the new Free Checking account within two weeks after all qualifications have been met and will be reported to the IRS. Minimum to open Free Checking is $50.
