The government has announced that they’ve generously granted everyone an extra couple of days to get their taxes filed this year, moving the due date from April 15th to April 17th. If you owe taxes, that two days might cause a sigh of relief, but if you’re anticipating a refund, now is the time to act. Why let the government hold on to your money any longer than necessary?
We recommend that you complete your tax returns as early as possible – this month, if you can. If you find out that you owe, you can always wait to file until you have the money together to pay, even filing an extension if needed. But if you are owed a refund, you can file electronically and have the money deposited in as little as two weeks.
Your tax refund is often the single-largest chunk of money you will get during the year, and while you could use it to buy a new big screen TV or to put down on a car, you can literally put that money to work for you in a way that will transform your credit rating and your future purchasing power by putting the money toward your credit debt.
You can use Ovation’s payment tools to determine the best course of action for your specific situation. Whether you split the money between a couple of cards to lower the balance to below 50% or pay off the card with the highest interest rate, you’ll be employing a strategy that will directly impact your overall credit score in a positive way.
Why is your credit score so important?
It directly impacts the cost of the items you buy on credit, like cars, houses, and major appliances. The higher your credit rating, the lower the interest rate you are able to obtain on large purchases. Think about it: if you buy a $20,000 car at 9%, you will end up paying about $5,200 in interest. If you purchase the same $20,000 car but qualify for a lower interest rate because of your credit rating, you will save a significant amount of money. Your good credit could help you obtain a rate of 2.9%, and that would mean only paying $1,650 in interest. In terms of monthly payment, if you finance over 5 years, your good credit reduces your payment from around $455 per month to $390 per month.
Rather than make a list of wants on which you could spend your tax refund, consider using your refund as a tool to provide you with long-term purchasing power that will continue to pay you back.