ways-to-use-tax-refund-smallAbout half of all taxpayers are expected to get a tax refund in 2016, according to Forbes. Of those who already filed their 2015 tax return, the average refund was slightly more than $3,050.  Whatever the amount of your tax refund this year, there are lots of ways to grow its value further. Here are six ideas to help you make more of your tax refund.

  1. Make your debt cost less. Any balance you owe on a low interest rate credit card probably costs you about 11% a month based on the current average credit card interest rates. But if you frequently use a credit card to earn points or cash back, and don’t pay the balance in full, that debt could cost you more than 16% each month. Regardless of the size of your debt, you can benefit by using your tax refund to pay down interest- bearing credit card balances. Put your tax refund toward the balance with the highest interest rate to make the most of your refund’s value.
  1. Improve your credit score. The amount of your available credit you use is one factor that determines your credit score. Ideally, you won’t use more than 30% of your total available credit (called your debt utilization ratio). Make more of your tax refund by scheduling your monthly credit card payment to arrive before the statement close date, which is usually about three weeks before the payment due date. This ensures that credit card balances reported to the credit bureaus each month reflect your most recent payment. Over time, you’ll lower your debt utilization ratio; your credit score could improve.
  1. Save for an emergency. Deposit interest rates have been historically low for several years, and remain at less than 1%, even for most online savings accounts. While the interest you earn on your savings account balance won’t grow your money significantly, having money saved means you won’t be forced to take on costly debt if a financial emergency happens. Financial experts recommend saving at least three months of income for an emergency—but you may need to save as much as a year’s worth of income if job security is uncertain, or you’re self-employed. Use your tax refund to start your emergency fund; keep contributing smaller amounts from each paycheck going forward.
  1. Buy the bottoms. The stock market has been volatile for most of 2016—but it can be a perfect opportunity to grow your tax refund by snatching up some stocks that have dipped in value, but have strong growth potential for the long-term. If you aren’t contributing the maximum to your retirement account(s), investments you buy for a retirement account could qualify for additional retirement contribution deductions when you file your 2016 taxes.
  1. Get expert help. If you don’t feel confident managing your money, you may procrastinate taking financial action. But time and money are directly correlated. The sooner your pay down debt, the less it ultimately costs you. The sooner you start investing in retirement, the less you have to put aside to have the amount of money you need to retire. If you’re not sure how to manage your debt, save or invest, use your tax refund to get the expert help you need to take control of your financial life. Financial advisors and planners vary in how (and how much) they charge for their advice, which may be based on a percentage of your assets that they manage, a flat fee for specific advice, or an hourly rate. If your budget is limited, you may also consider online advice through a financial site like LearnVest, which offers customized plans and ongoing coaching from a qualified financial professional, for less than $300.
  1. Invest in education. If you have student loans, consider making additional payments to get out of student loan debt sooner. If you have children, invest your tax refund in a 529 Savings Plan. It helps you prepare for future education expenses—and could reduce the amount of state taxes you owe in 2016, too.