Three out of four Americans expecting a tax refund this year plan to save the money or use it to pay off debt, according to a survey by GOBankingRates.com.
The survey showed that 30 percent of those who responded will not receive a tax refund, 27 percent will pay off debt (loans, credit cards, etc.) and 25 percent will put the refund in savings. Other responses were 9 percent will put the refund toward a vacation, 5 percent will make a major purchase (car, home, etc.) and 4 percent will splurge on a purchase, such as a new TV or shoes.
"Tax refunds are income that falls outside of Americans' typical paychecks, so even though it's earned and well-deserved, there is definitely a temptation to view it as 'free money' that can be splurged or even wasted," said Elyssa Kirkham, the lead GOBankingRates finance reporter on the study. She said it was encouraging that most people are planning to use the tax refund to better their financial situation.
Other findings were that respondents ages 18 to 24 are more than twice as likely as baby boomers to splurge or make a major purchase with their refunds and that women selected "pay off debt" 20 percent more frequently than men.