SAN ANTONIO — More money might be in your pocket soon. The IRS said the average refund in 2019 was about $2,500.
“You’re wondering what to use it for?” said Nathan Grant, a senior credit card analyst with Credit Card Insider. “If you’re carrying high interest debt, that’s usually one of the best things to put it towards.”
He said put your refund towards the credit card with the highest interest rate first.
“Credit card debt is an important one because unlike some other financial strain, it’s kind of an ongoing thing until you pay it down,” Grant said. “With the interest payments, it’s like every month the interest fees are taking away from, you know, other things that you could be putting that money towards. The highest interest debt is what’s going to be eating at you every month until you get that paid. So, even making a significant chunk into the debt that you’re carrying on high interest debt is going to be a very good use of your tax refund.”
Or use it to save to get back on track if you are debt free.
“I’d start applying that to my overall savings just to help build up the money that I’ve been having to live on,” said Ryan Moore, a financial advisor with Kingman Financial Group. “I’d like you to have maybe six months of savings at all times, and they’re probably depleted a little bit.”
Next, support others by giving.
“If you have the ability and the heart, try to go help someone else out, maybe a charity or just an individual you admire,” Moore said. “Try to help them back on their feet and warm your heart.”
Finally, you might take a small part of your refund and have some fun.
“The last thing I do, if we have all those bases covered, is go have a little personal journey myself,” said Moore. “Maybe it’s family time. Maybe take a little road trip or hop on a plane.”
If you owe the IRS, know you can use a credit card to pay for it, but it could cost you more in the long run.
“The IRS doesn’t accept credit card payments directly,” Grant said. “Instead, they have licensed several payment processors so that they’re able to accept credit card payments on their behalf.”
That means an extra fee of around two percent on top of what you owe.
“It just might cause more financial strain down the line,” said Grant.
A better option if you cannot pay what you owe in full right away is using one of the IRS’s payment plans.
“There still will be fees, but it will be much less,” Grant said.
If you have a question for Eyewitness Wants To Know, email us at EWTK@kens5.com or call us as 210-377-8647.