Use Your Tax Refund to Knock Down Debt, Lift Your Finances

LM Otero/AP Photo

So you’re expecting a tax refund this year. With inflation driving up the price of gas, food, and nearly everything else, that extra money can’t come soon enough. The hard part is deciding how to spend it. Should you invest the money? Book a trip?

If you really want to do yourself a favor, use your refund to pay off debt. Here’s why.

You'll Save on Interest

“The cost of carrying debt is very expensive,” says AnnaMarie Mock, a certified financial planner with Highland Financial Advisors in Wayne, New Jersey. “Especially if you’re looking at regular consumer debt, like credit cards, (the interest rate) could be north of 16 percent.”