A Third of Americans Plan to Spend All or Part of Their Tax Refund, Finds Capital One Bank Survey
Everyday Expenses Top Big Purchases, Vacations, Clothing and Electronics as Spending Priorities
Still, many Americans are using their refunds to save or pay down debt, with one of every four (27 percent) saying they plan to save at least part of the money they get back from Uncle Sam, 17 percent planning to pay down debt and 5 percent investing their refunds. However, almost seven in ten (69%) Americans do not calculate their tax refund or tax payment into their annual budget.
“Most people are not factoring their annual return into their overall
financial plan and long-term objectives,” said
More than half (58 percent) of respondents said that the current economic climate will not impact their refund plans. For those planning to spend all or part of their returns, everyday expenses topped the list of shopping priorities:
- Everyday expenses (28 percent);
- Major purchases (e.g. autos, appliances, etc.) (9 percent);
- Vacation (8 percent);
- New clothing and accessories (6 percent); or
- Electronics (e.g. iPad, TV, smartphone, etc.) (5 percent).
With the tax deadline quickly approaching, only 11 percent of respondents said they are likely to wait until the last minute to file their tax return and take advantage of the late filing deadline. Among the late filers, men make up the majority at 61 percent.
Of those consumers who will owe taxes this year, 32 percent say they
will need to dip into their personal savings to cover the cost. One
quarter (25 percent) has set aside savings specifically for taxes and 19
percent will do an installment agreement or payment plan with the
Start saving ASAP – In the fluctuating economy it can be challenging to think about saving money, but the adage “the sooner the better” certainly applies when it comes to saving, and it’s never too early or late to start. The sooner you start saving the more interest you can earn.
Look for a product with a strong rate – When reviewing your savings options choose the product with the best rate of return that matches your lifestyle and needs. Some checking accounts are offering higher interest rates than even CD accounts, giving more flexibility and access to your funds than a CD would. Capital One Bank’s High Yield Free Checking account earns an interest rate that is five times the national average. The rate is guaranteed for one year.
Save regularly by setting up automatic transfers – Don’t stop contributing to your savings after getting your refund. While it can be difficult, it’s always a good idea to get into a routine of putting aside money. One of the easiest ways is to have funds automatically moved to your account every month or with every paycheck. This is particularly important if you need to set aside savings at the end of the year for taxes.
Avoid unnecessary fees – When choosing a savings product, make sure that you’re not losing your hard-earned cash to fees. Look for a product that offers no recurring monthly fees.
Make sure your money is safe – Make sure any savings tool you use is FDIC-insured.
A final tip is to save in preparing your taxes. Capital One customers
get a 35 percent discount on TurboTax® Online Federal products. TurboTax
gives step-by-step guidance and free one-on-one tax advice from an
experienced tax professional, via phone or chat. Details are on the
The findings reported in this release are from telephone surveys
conducted by the opinion research firm,
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