Use Your Tax Return Wisely

May 14, 2025

Deciding how to use your annual tax return is a difficult decision for many reasons. You may be tempted to make a big purchase you've been debating, or let it sit in your checking account because you can't decide how to use it.

For the best impact on your financial goals, you should create a strategic plan for this extra income. Before you make a decision, take the time to explore all of your options. Here are some smart ways to use your tax refund this year.

Pay Down Debt

Even if your monthly debt payments are manageable, that does not necessarily mean you should use your refund for a frivolous purchase. Making an additional payment can shorten or decrease the impact of compound interest in the future. Consider applying the cash to your debt that is subject to the highest interest rate. This method can save you money, as you will end up paying less accrued interest later.

Build an Emergency Fund

Emergencies happen. According to a Bankrate survey, 57% of Americans could not finance a $1,000 emergency expense with savings. If you fall into that category, the right decision may be to save your refund for that possible expense. Even a portion of your refund would be a great start. Having that cash to fall back on in an emergency will prevent you from going into debt.

Share Certificate Account

You may be able to use your refund with little to no additional funds to open up a Share Certificate savings account. The average tax refund for working Americans in 2025 was around $3,000 at the start of tax season, and the minimum deposit required for a CASFCU High-Yield Share Certificate account is $2,000. With a Share Certificate account, you could earn returns up to 4.19% APY* in a short period of time without sacrificing your typical monthly budget.

Money Market Account

If you want high returns with convenient accessibility, CASFCU Money Market Accounts are a perfect step up. These savings accounts require a minimum balance of $2,500.

Save For Vacation or The Holidays

Are you still recovering financially from the holiday season this spring? If you want to prevent incurring additional debt this year, use your refund to save for holiday expenses in advance. If you were planning to use credit to fund your upcoming vacation, consider setting aside some cash from your refund to avoid taking on new debt.

Contribute to Your Retirement Accounts

CASFCU offers three different types of IRA accounts. Investing in your future is important, and you should be aware of all your options. Even if you are contributing the full amount toward a 401k with an employer, you can still max out your IRA contribution limits on top of that. Choose from our Traditional, Roth, and Certificate IRA Accounts.

Invest in Yourself

Working in education, you know how important academics are. If you’ve been wanting to get back in the student’s chair, now might be the time to consider an additional certification or degree. Investing doesn’t always mean saving money in an account. You can also invest in yourself by getting an education or taking a course to learn a new skill that will help you grow.

Deciding what to do with your tax refund depends on your financial situation. Before spending this large sum of money, make sure you have carefully considered all of your options and which aligns best with your goals. Take a step back before spending and assess your financial health and consider reaching out to a financial counselor. We are here to help you discuss your options and guide you in your journey. Contact us today to learn more about your savings options.