Are you expecting a substantial income tax refund this year? You’re in the majority. The average refund is around $3,100, according to the IRS. Rather than making those dollars part of your regular spending routine, here are 10 smart things to do with your income tax refund.
1. Pay down high-interest loans and lines of credit. With average annual interest rates for credit cards and personal loans hovering around 28%, paying off that credit card before making other investment decisions makes good sense.1
After paying down your high-interest credit cards, switch to one with lower interest. Our Select Visa® offers rates as low as 8.99% APR and 0% intro APR on purchases for the first six months.2
2. Fund your retirement account. If you haven’t invested in a retirement account, consider contributing to one.
An Individual Retirement Account (IRA) can help you secure your financial future. They offer tax advantages to help your money go further. You can open one through us. We offer a Traditional IRA, Roth IRA, and SEP IRA.3
3. Invest it. Instead of just working for money, let money work for you. If you invested one lump sum of $1,500 every year in the stock market for 30 years, assuming a 10% return,4 you’d have approximately $249,000!5 While the stock market has been shaky recently, over time, it has paid a nice return. (Of course, do your research before making any investment decisions and talk to licensed investment and tax professionals).
4. Open an emergency account. Most Americans don’t have money set aside for those financial emergencies that always seem to happen when there is no cash in the coffer. A large tax refund is a great start for an emergency account. Experts recommend an emergency fund have between three to six months’ worth of essential living expenses.
Our Online Savings account pays an impressive 3.00% APY6 with Direct Deposit (2.00% APY without it). If you’re searching for an account that offers a good yield with controlled access, consider our Rainy Day Savings account. You earn 2.00% APY7 on balances up to $2,000 and can make a maximum of two free withdrawals per calendar year.
5. Pay for repairs. Maintaining your home or vehicle today will result in dollars saved tomorrow. Use your refund to repair that leaky roof before it becomes a bigger problem; replace those dangerous bald tires with new, safe ones.
If you need to make a big purchase that requires funds beyond your tax return, we can help. Our fixed rate Home Equity Loan offers rates as low as 7.99% APR8. Or check out our home equity line of credit (HELOC) with rates as low as 8.49% APR9. To help qualify for our lowest rates, you’ll need to sign up for Direct Deposit with Auto Pay for either loan. You can borrow up to 100% of your home’s equity with either option. And you can use the funds for anything, it’s up to you. If you want to get behind a new or used vehicle, our auto loans start at only 7.49% APR10.
6. Invest in yourself. Investing in your emotional, physical, intellectual, and career growth is a wise use of money. Whether paying for a gym membership, a cooking class, or continuing education courses, you’ll feel the effects of this type of investment fast and it can lead to career success that earns you more money.
7. Make an extra home mortgage payment (or two). Though you won’t feel the benefit immediately, doubling up on a mortgage payment now can save you thousands in interest and help you build equity in your home more quickly.
Don’t have a mortgage but are ready to jump into homeownership? Our mortgage experts are ready to help. You’ll get competitive rates and excellent service.
8. Donate to a charity. Giving back to the community is a wonderful way of supporting a cause you’re passionate about. Even better – in many cases, at least a portion of your donation is tax deductible.
9. Open a college savings plan for your child. A four-year, out-of-state college education can cost well over $100,000. Save for your child’s college education with a college saving plan. For the most part, withdrawals are tax-free when used for higher education purposes. Talk to a licensed investment professional about your different options.
A Coverdell Education Savings Account is a nice place to start saving for college. You can use the funds to pay for qualifying tuition, books, supplies, and more. And you can contribute $2,000 per child per year.
10. Plan a vacation. If you are in a fluid financial position and can afford to treat yourself, do something you’ve been dreaming of. Money is to be enjoyed, earned, saved, and invested. Go ahead. Book a trip to a place you’ve always wanted to visit.
Final thoughts.
Although these are 10 smart things to do with your income tax refund, remember that instead of planning for a refund, it could be more beneficial to come out even. A tax refund is an interest-free loan to the government; it’s money not in your pocket every month that you could use to manage expenses and savings. If you have been getting a tax refund each year, consider changing your withholding exemptions so less tax is withheld from each paycheck. While a tax refund may feel like a gift from Uncle Sam, it’s not—it’s money that you have overpaid on your income taxes. However, if you use this as a form of saving, we hope these 10 tips help you make smart spending decisions with your refund.
This article was developed in partnership with our friends at Balance Pro. This article is only intended to be used for general informational purposes. Please consult a tax professional for the most current data and personal advice for your situation.
1. Coleman, Evan, “What is the average credit card interest rate this week? February 17, 2025.” Forbes.com. Published 24 March 2025. Accessed 15 April 2025.
2. $100 Bonus for New Credit Cards for: Crystal Visa, Select Visa & Visa Platinum: A $100 (one hundred dollars) bonus will be paid in the form of “Visa Statement Credit” when at least $5,000.00 (five thousand dollars) is spent in purchases within the first 3 months (qualifying period) of the “New” Visa card opening. Bonuses will be paid out within 90 days after the qualification period. Example: If a card is activated on January 1, 2021 and the total of qualifying purchases for the months of January, February and March is at least $5,000, the primary borrower will receive a Bonus of $100 (one hundred dollars) no later than July 1, 2021. Limit of one reward/bonus per member number. Qualifying transactions must “post” to the designated account during the qualified period. All qualifying purchases will count towards the $5,000 in spent purchases unless return for credit of any of the qualifying transactions takes place within 90 days of the end of the qualifying period. Transactions may take two business days from the date of purchase to post. Member must be in good standing to be eligible for bonus. New accounts are subject to FIGFCU approval and all other terms and conditions apply. This offer is valid only for individual account /card holders, is non-transferable and cannot be combined with any other offer. The $100 Bonus is a product promotion sponsored by FIGFCU and may be discontinued at any time. Visa is a registered trademark.
APR = annual percentage rate. Rates are subject to change at any time.
The balance transfer amount from other Farmers Insurance Federal Credit Union credit cards will retain its current rate (i.e., Select Visa at 8.99% – 18.00%, Visa Platinum at 10.99% – 18.00%, until the transferred balance is paid off. APR=Annual Percentage Rate. Rate quoted is the lowest rate possible for qualified borrowers and is subject to change. Qualification is based on credit history, debt, and the ability to repay. Your rate may vary. All loans subject to credit approval. The newly opened Credit Union credit card’s rate will only apply to new transactions. Any balances on the previous Credit Union credit card must be paid off at the prior credit card’s rate.
Zero Percent (0%) Introductory Rate Promotion for purchases, is offered for new FIGFCU Select Visa® Credit Card account holders. This incentive offer, is not available to those members who are opening a new Select Visa and had an outstanding balance or a closed FIGFCU Zero Percent Loan account and/or had any FIGFCU Select Visa® Credit Card within the last year. If you are in an introductory rate promotion period, you are not eligible to transfer other loan balances, line of credit balances, credit card account balances or CASH Advance to take advantage of the introductory rate promotion.
The program promotion may be modified, suspended or cancelled or may be changed at any time without notice and without restriction or penalty. Farmers Insurance Federal Credit Union reserves the right to change the promotion rates and program retention period from time to time. You will be notified of any expiration or program changes as required by law. Contact Farmers Insurance Federal Credit Union for details on applicable conversion to current rate and payment options which are then in effect. At Farmers Insurance Federal Credit Union’s sole discretion, the program offering of the program may be terminated, for any reason, including but not limited to a “Rules Violations”, your Farmers Insurance Federal Credit Union account is not in good standing or is suspected of fraud, or if you move to another Farmers Insurance Federal Credit Union credit card.
This program is void where prohibited or restricted by law. You are responsible for any federal, state, or local taxes.
Effective Offering Dates: Promotion period for Zero Percent (0%) introductory is effective for FIGFCU Select Visa® Credit Cards opened beginning July 20, 2020 through “until further notice”.
Loss of Introductory APR: We may end your introductory APR and/or apply the Penalty APR if you make a late payment or are Over limit.
Billing Rights: Information on your rights to dispute transactions and how to exercise those rights is provided in the Billing Rights section of the Visa® Credit Card Agreement.
Introductory rate and incentive offers for Select Visa®, are not available to those members who had an outstanding balance on a preexisting or closed FIGFCU Visa® Credit Card account and/or had an FIGFCU Visa® Credit Card within the last 12 (twelve) months. If you are in an introductory rate promotion, you are not eligible to increase limits until the introductory rate promotion has expired.
TERMS AND CONDITIONS The introductory Annual Percentage Rate (APR) Zero Percent (0%) will apply to purchases made during a promotional period of 6 (six) months from the date of opening of your Visa account. After this promotional period ends, 6 (six) months from the date of activation of your Visa account, your standard APR will apply to any remaining balance and to all new purchases and balance transfers. The terms of this introductory rate may not be applied to existing Farmers Insurance Federal Credit Union Visa accounts.
This promotional introductory offer is based on meeting Farmers Insurance Federal Credit Union’s criteria for creditworthiness. Farmers Insurance Federal Credit Union will review your credit and employment history and any other information permitted by law to process your application. The credit line on this account will be determined after a credit review of your application by Farmers Insurance Federal Credit Union and will be based on various factors, including income. FIGFCU maintains the right to not open this account if: a) the information provided is incomplete, inaccurate or cannot be verified, or if you do not meet Farmers Insurance Federal Credit Union’s standards for creditworthiness; b) your name and/or mailing address on the credit application have been altered; c) the income you reported on the application is insufficient to support the opening of this account; or d) you do not meet Farmers Insurance Federal Credit Union’s membership eligibility or “member in good standing” requirements. You have the right to review your credit history by contacting the appropriate credit reporting agencies.
Change in APRs, Fees and Other Terms: Farmers Insurance Federal Credit Union may change the APRs, fees and other terms of your account at any time in accordance with applicable law and the Visa Credit Card Agreement. Factors we may consider in determining whether and how to change your terms include, but are not limited to, a late payment or an extension of credit that exceeds the credit limit, the frequency and severity of defaults and other indications of risk on accounts with Farmers Insurance Federal Credit Union and other creditors. To the extent allowed by law, the change in terms will affect all outstanding balances. If we increase your APRs, the new APRs will apply only to new transactions you make after we notify you of the change in writing unless it is for default in terms as outlined above.
3. Consult your tax advisor regarding tax consequences and your specific situation.
4. Royal, James, “What is the average stock market return?” Nerdwallet.com. Published 10 April 2025. Accessed 15 April 2025.
5. “Savings Calculator,” saving.org. Accessed 15 April 2025.
6. APY = Annual Percentage Yield. APY is the annualized rate based on a compounding period of one year. When the deposited money earns dividends and the accumulated dividends starts earning dividends as well, we are talking about compounding. Fees could reduce the earnings on an account. All yields except Certificate yields are subject to change retroactively to the beginning of the month.
Rate bonus is for a minimum of $1,000 monthly ACH Direct Deposit or Agent Net Check into a Farmers Insurance Federal Credit Union Checking Account. Rates are subject to change at any time. No branch or call center access with this account. The national average for this type of account is 0.42% APY, based on rates published in the FDIC Monthly National Rates and Rate Caps accurate as of 01/21/2025.
7. APY = Annual Percentage Yield. Rates are subject to change at anytime.
Limit one Rainy Day Account per qualified membership. Rainy Day Savings is an interest earning savings account eligible for 2.00% APY interest on balances up to $2,000 and the standard Membership Savings rate on balances over $2,000 when funded via recurring ACH deposit or other qualifying external funds. Dividends are calculated by applying a periodic rate to the Average Daily Balance in the account for the Dividend period. Interest earned will be credited to the account at the end of the statement period. This account is limited to two withdrawals per calendar year, each withdrawal in excess of this amount will incur a $20 excessive withdrawal fee that must be paid at the time of the withdrawal. This account does not qualify for withdrawal access via debit or check and does not support transactions originating via VRU, online banking, mobile banking, or ATMs. Withdrawals can be made in person at a Credit Union branch or by calling us at 800.877.2345. This account does not qualify for overdraft protection. Account holder must be a member with a regular share account who is in good standing. Current interest rates and the annual percentage yield may be found at the Credit Union’s website, may be verified at a Credit Union Branch or by calling 800.877.2345. Interest rates earned and qualifying dollar amounts for interest earned are subject to change at any time. APYs and eligibility criteria are subject to change at any time. Fees may reduce earnings.
8, 9. APR = Annual Percentage Rate. APR is the annual rate of interest that is paid on an investment, without taking into account the compounding interest within that year. Rates are subject to change at any time. 1.00% rate discount is for a minimum of $1,000 monthly ACH Direct Deposit or Agent Net Check into a Farmers Insurance Federal Credit Union Checking Account and Automatic Payment/Folio Deduction as a repayment method to qualify. Rates are subject to change at any time. There is a $500 refinance fee for Home Equity Loans booked within the last 12 months, unless $20,000 new cash is added to the loan request.
10. APR=Annual Percentage Rates. Rates shown are our preferred rates based on credit worthiness and a 1.00% Auto Loan discount for a minimum of $1,000 monthly Direct Deposit or full Agent Net Check into a Farmers Insurance Federal Credit Union Checking Account and Automatic Payment/Folio Deduction as a repayment method to qualify. Rates and terms are subject to credit approval. Other rates and terms are available. Other restrictions may apply. Financing available up to 130% of the Purchase Price, including tax, license, warranties and negative equity on a trade for qualified borrowers. Please speak with a Loan Representative for complete details and qualifying criteria. Rates and terms are subject to credit approval, are subject to change at any time and without notice. All values are determined by the Credit Union using either vehicle cost or Kelly Blue Book/NADA, whichever is lower. Other rates and terms are available.
