BOSTON (CBS) – The average taxpayer’s refund this year will be around $3,000 this year.

This is not a windfall! It is your money. You allowed your employer to withhold too much money last year and you are now getting it back.

So what to do with your refund? Well as you all know I recommend the practical stuff. So don’t even think about rewarding yourself if you have credit card debt!

The nation’s credit card debt is over $850 billion. And those who are carrying debt month-to-month, the average is $15,000 a household.

Use your refund dollars to start to pay down your debt! Pay off your credit card debt and take a pledge that you won’t let it get that high again. Look at your cards and pay down the one with the highest interest rate. If you are carrying $3,000 on a card with a 19% interest rate you have just saved yourself $513 in interest charges over the next year.

If the $3,000 doesn’t wipe out the whole of your debt, consolidate your high interest cards to the card with the lowest rate. Work hard at paying down that debt by making payments each month that are larger than the minimum required. Use your credit cards wisely and once out of debt resolve to pay your credit card bill in full each month.

Credit card companies are finding more ways to nickel and dime you in this economy. Good customers are being penalized by having their interest rate go up or their limit reduced. If you are late with one payment you could see your interest rate bumped up.

Another way to save on interest and to battle debt is to make extra principal payments on your mortgage. Making two extra payments a year can cut a 30-year mortgage down to 20 years, saving you thousands in interest costs. Use your refund as the first step to being debt free.


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