FOR IMMEDIATE RELEASE

The Financial Five -- February 2013

46% of Ohioans Plan to Use a Tax Refund to Pay Off Debt

Five tips on how to put your tax refund to work for you

Columbus, Ohio (February20, 2013)For Ohioans lucky enough to receive one, a tax refund is like an extra paycheck. For others, a refund is an opportunity to replenish their “rainy day” fund, which dwindled as unexpected expenses occurred. Still others count on a tax refund to fulfill the vacation of a lifetime.

According to a survey by the Ohio Credit Union League (OCUL), 46% of Ohioans who are expecting a refund will use the money to pay down existing debt, while 41% will invest it in a savings vehicle. Only 6.5% are planning to make a major purchase with their refund, and a very small percentage will use it start a new business. All in all, the results point to a tendency by Ohio taxpayers to put their tax refund to work for them.

“Saving or paying off debt is sound financial advice that can immediately improve your personal finances,” said Patrick Harris, Director of Media and Public Relations for the Ohio Credit Union League. “If your tax refund is substantial enough to start an emergency fund, do so. Or, if your monthly budget is weighed down with monthly credit card payments, use your refund to pay the balance down.”

OCUL suggests using a tax refund for one or more of the following:

  • Start a “rainy day” fund.The term “rainy day” is misleading, as unexpected financial woes happen in any weather. Car repairs, home maintenance, and health expenses always occur when they are least expected. Putting money aside helps you manage the unimaginable.
  • Pay down a credit card or loan balance.Nothing hampers a budget like interest-laden monthly loan payments. Whether in the form of a credit card minimum amount due, or repaying a home equity line, shrinking your balance due can minimize your payment and shorten the life on the loan.
  • Invest it long term. The further away you are from retirement, the more your refund can benefit you. Talk to a credit union about long term investment options, and watch your money grow.
  • Invest it short term. While returns on short term investments, such as certificates of deposit, are at record lows, they are still safe and earn interest. If you are looking to make a major purchase in a year, investing short term can grow your refund into a generous down payment.
  • Start a college savings plan. If your children have college aspirations, consider using your refund to start an education savings plan. The cost of attending college is forecasted to rise significantly over the next decade, so investing in higher education now is smart.

The Financial Five is a monthly consumer column from Ohio’s credit unions that provides important financial tips to consumers.

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The Ohio Credit Union League, with offices in Columbus, is a state trade association representing 365 credit unions. Credit unions are not-for-profit financial institutions owned and democratically-controlled by their members. Ohio credit unions provide savings, loans, and other consumer financial services to 2.73million members. To learn more, visit