Using Tax Refunds To Pay Down Credit Card Debt

Instead of letting Uncle Sam use your money interest-free, look at what happens when you use your refunds to get out of credit card debt. Say you owe the current average credit card balance of $9,312 on a card charging 17%. If you only send in the required 3% minimum payment every month, that card will cost you $17,465 by the time you pay it off, over 21 years from now - assuming you don't charge anything else.

Now let's assume you get a tax refund amounting to last year's average of $2,171. If you send it in as a lump sum payment against your credit card balance, you'd cut the cost down to $15,524, saving $1,943 in interest, and you'd be out of hock in under 20 years.