8 ways to use your tax refund wisely

by. Shirley Pulawski

Tax time is right around the corner, and anyone anticipating a refund has probably started thinking about how that refund will be spent. For some people, a tax return is seen as a good excuse to buy a luxury item or take a vacation. For people who are savvy with their personal finances, a tax refund check is a useful tool for getting ahead financially.

The average refund over the last several years has run about $3,000, which is a great way for a first-time investor to get started with saving, or for a seasoned investor to bolster their nest egg. It can also be used to pay off debts or smartly refinance other ones. Here are some ways to get the most out of your tax refund check.

1. Pop in a new CD

A certificate of deposit, or CD, is a savings account that pays interest over a certain term, typically three to 10 years. Longer-term CDs usually pay larger dividends, but the money is tied up over the term. Dividends can be over or around 2 percent in today’s market, so an investment of $3,000 into a 60-month CD would yield about $310, or over $650 on a 120-month CD.

CDs are generally low-risk because they are FDIC insured, and the minimum amount required to invest can vary. Click here to see our CD page to learn about CDs and current rates available.

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