We’re in the middle of tax season and I’m sure you’re all excited with the prospect of receiving a tax refund this year. Most of the time, the moment we think of receiving money from our tax return we’re already planning on how we’re going to spend it. Whether it’s a payment towards your next vacation, upgrading your television or mobile phone, or treating yourself to something special. For 2020, why not make a smarter choice for your tax return that will be beneficial to your credit and financial health and an invest in yourself?
According to Government of Canada, there have been approximately 2,570,001 refunds returned out of 3,993,792 filed across Canada from February 12, 2020 to March 9, 2020. During this period, $4,677,740,425 has been refunded in total. Following this, an average of amount of $1,820 was returned which gives Canadian’s a rather large amount of money to utilize regarding their personal economic health. It’s important to note, that not everyone gets a tax refund each year, so you should not rely on this money as a guarantee. You should also remember that you might receive less (or more!) than the average tax return.
We recently discussed the how to rebuild your credit after your consumer proposal and discovered that checking your credit score isn’t all that bad for your credit. So, let us discuss some ways you can spend your tax refund to benefit your credit and financial health.
Kick start your emergency fund
According to Loans Canada, 72% of credit-constrained Canadians do not save for emergencies. It’s important to be financially prepared for any situation that may occur and vital to have money aside if you find yourself in a sticky situation.
As well as the obvious, having an emergency fund is an indirect way you can boost your credit score. For example, the more money you have aside, the less likely you are to use your credit card in the case the unexpected happens. When you move away from relying on your credit card to cover emergency expenses, you will automatically use your credit card less and protect your score.
Pay off your credit card debt
Your credit card debt could be one of the factors affecting your credit score right now. If you’re looking to boost your credit score in a flash, why not put your tax refund towards any outstanding credit card balance? Whether it’s a student loan or credit card debt, putting your return towards the balance is a great way to tackle your highest interest debt.
Each day you have high interest credit card debt, is another day of losing money as you’re being charged more than you’ve spent. A good way to start is to look at your credit cards, check their balances and assess the interest rates. You can then use your refund to wipe out as much debt as possible. Not only does this reduce minimum payments and help you either clear your debt completely or get closer to that magic zero balance, but your score will increase due to the percentage of credit that will become available.
Lighten the load and pay off your personal, student or car loans
Swimming in student debt? You’re not alone. We recently discussed our essential saving solutions for students and how you could change your spending habits to reflect positively on your finances. We believe another great way to ensure you’re not leaving university with lots of debt, would be to put your tax refund towards your loan.
It’s a simple way to avoid that extra interest and helps you become debt free at a faster rate. Even if you are only paying a small percentage, your bank account will thank you! And this also applies to a personal or car loan too.
Apply for a Credit Secured Card.
If you have no credit or poor credit history, a great way to use your tax refund is towards a deposit for a secured credit card. It can help you establish great credit patterns with your bank and contribute to good credit health.
With a secured credit card, the deposit required is equal to the line of credit you have available. So for example, you deposit $1000 and have $1000 credit limit. The benefit of using a secured credit card is that your repayments will often be reported to the credit bureau, which will improve your credit score in time. A great investment in yourself and your future.
Treat yourself (a little!)
We don’t expect you to put every penny towards credit card debt, loans or savings fund. After putting your tax refund to good use, why not treat yourself to something nice? How about some bath salts, candles and have a relaxing end to your busy of putting your tax return to good use! No more stress!
Want more ideas on how to spend your extra cash from your tax refund? Well Score-Up might be for you. This software will help provide you with the fastest most economical way to achieve your desired credit score. Not only this, but among the many proprietary features, the Money Simulator feature provides advice on the distribution of available cashflow and funds to achieve a higher score. So, if our other ways to spend your tax return were not your cup of tea, this might be your ticket to financial freedom.
About Marble Financial Inc. (CSE: MRBL; OTCQB: MRBLF) We are a group of forward-thinking financial technology experts that fully understand the benefits and drawbacks of credit in Canada. Marble helps Canadians rebuild their credit to gain access to prime lending, through our industry-leading proprietary technology solutions Fast- Track, Score-Up, and Credit-Meds. Our proven strategy guides our customers back to a meaningful credit score, 50% quicker than traditional methods. Since 2016, Marble is proud to have empowered thousands of Canadians to a positive financial future. We continue to establish ourselves as leaders in financial wellness.