If you are like many Americans, you probably have some amount of credit card debt that you’re carrying, and you need to make payments on that debt every month. If something happens that results in a break in your income, you could find yourself in serious debt trouble fast.
For this reason, you may want to consider using the money received for your income tax refund to help pay off your credit cards. It is better to use that extra cash to pay down your interest-accruing debt than to leave it sitting in a bank account.
Although the average American household has credit card debt amounting to over $16,748, only about one out of every five American taxpayers will use their refunds to help pay down their credit cards. Considering that the average tax return size is about $2,860, this amount of money could go a long way to help pay off outstanding debts. If you do choose to use your tax refund like this, you may want to consider paying off the card that has the highest interest rate first.
Many Washington residents are suffering under credit card debt levels that are completely unmanageable. If these individuals took the time to focus their attention on their debt, and made the necessary lifestyle changes to free up extra money, many of them could be debt-free much sooner than they believe.
If you are in this kind of situation, you may want to talk to a local bankruptcy law attorney who can advise you of your legal rights and options, whether bankruptcy is right for you, and what other debt resolution strategies may be available.
Source: CNBC, “Use your tax refund to get a grip on credit card debt,” Kelli B. Grant, April 03, 2017