Things You'll Need:
- Calculator
- Bank statements
- Credit card statements
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Step 1
Try not to dump your money in to your saving account. Remember, even if you have the highest interest saving account, you are still at loss if you invest your tax money in such an account. The rate of inflation does not match with the rate of interest that most banks offer. In other words, the buying power of dollar is decreasing at a faster rate than the saving account interest rates. Let's say if you had a $100 today, at an APY of 4% you would have $104 at the end of one year. What you could buy with your $100 today would cost you $106 at the end of the year. Therefore you lose $2 rather than earned $4 as interest.
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Step 2
Pay off your credit card debt. The wisest way to use your refund money is to get debt free first. But do not pay off the credit cards that have an ongoing promotion of 0% APR. Pay off your high interest credit debts first
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Step 3
Divide the rest of your refund in to three equal parts. Apply one part of your tax refund to the principal of your auto loan. Be sure to call your auto creditor first to get the right payment mailing address for the principal payments. Most of the major auto creditors have different addresses for the regular monthly payment and principal only payment. Decreasing your principal balance will reduce the amount of your monthly interest.
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Step 4
Apply the second part of your tax refund towards the principal of your mortgage. This will again decrease the monthly interest amount.
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Step 5
Invest the third part in IRA, mutual funds or stocks.
Comments
shahbasharat said
on 9/10/2009 read this:
http://www.ehow.com/how_5384274_high-rate-cd-saving-account.html
missforty said
on 6/23/2008 Good advice!