3 smart ways to use your tax refund this year, according to experts
#tax refund #high-yield savings #debt reduction #mortgage payments #financial planning #interest rates #snowball method #long-term strategy
📌 Key Takeaways
- Tax refunds in 2026 are expected to be $300-$1,000 higher than usual
- High-yield savings accounts and CDs offer interest-earning options with varying liquidity
- Paying down high-interest debt provides significant long-term savings
- Extra mortgage payments can substantially reduce total interest paid over the loan's life
📖 Full Retelling
Financial experts are advising Americans on strategic ways to use their 2026 tax refunds, which are expected to be $300 to $1,000 higher than usual due to changing tax laws, as tax season officially gets underway across the United States. With the economic landscape experiencing volatility over the past year, financial moves that may have been optimal in 2025 might not be the best strategy in 2026, making expert guidance particularly valuable this year. The first recommended strategy involves depositing refunds into high-yield savings accounts or certificates of deposit, with current national averages at 0.39% for savings accounts and 1.61% for 12-month CDs, though some institutions offer rates close to or above 4%. Financial advisors note that high-yield savings accounts provide liquidity and flexibility, while CDs make sense for those who can lock up funds for a defined period. The second approach focuses on reducing high-rate debts, particularly credit cards which now carry an average interest rate of nearly 21%. Experts suggest using the snowball method, targeting the largest balance first while making minimum payments on other cards, to create momentum and motivation in debt repayment. The third strategy involves making substantial payments toward mortgages, especially for those with rates above 4%, as even a $3,000 annual payment on a $350,000 mortgage could save over $173,000 in interest throughout the loan's term while also shortening the loan period.
🏷️ Themes
Personal Finance, Tax Strategy, Wealth Building, Debt Management
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Original Source
MoneyWatch: Managing Your Money 3 smart ways to use your tax refund this year, according to experts We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. By Aly J Yale Aly J Yale Aly J. Yale is a contributing writer for the Managing Your Money section for CBSNews.com, covering various personal finance topics, including investing, homebuying, loans and more. Read Full Bio Aly J Yale Updated on: February 16, 2026 / 9:24 AM EST / CBS News Add CBS News on Google Tax season is officially here, and while that's typically no reason to celebrate, this year it may be. This year, Americans can expect tax refunds that are between $300 and $1,000 higher than usual, according to the Tax Foundation , which is due, in large part, to changing tax laws. But what exactly should you do with that extra money from your tax refund when you get it, especially if you want to maximize the impact it has on your budget? The economic landscape has seen its fair share of volatility over the last year, after all, so some financial moves and investments that might have been smart in 2025 won't be the right strategy in 2026. Here's what to know. Start earning more with the right high-rate CD account today . 3 smart ways to use your tax refund this year, according to experts Want to make sure you use your tax refund in the most strategic way possible this year? Here's what experts say you should do with the money. Put it in a high-yield savings account or CD If you want to grow your higher-than-average refund even more, depositing it into a high-yield savings account or certificate of eposit account is a good strategy to consider, experts say. While rates on these products are lower than they were a few years ago, "they're still fairly high," says Brittany Pedersen, director of deposit and payment operations at Georgia's Own Credit Union. "You could start earning interest on your refund right away." Nationally, the average in...
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