Five Ways to Get More Mileage Out of Your Tax Refund

1. Clear away debt. Average standard credit card rates are now running from 13% to 15%, according to Bankrate.com, and many store cards are well above 20%. Paying down your highest rate balances first can help you save substantial interest over time. Apply for a HCCU VISA Credit Card with rates as low as 9.9% APR to cut down on interest while you're paying back the balance!
2. Begin or add to an emergency account. Many financial experts recommend amassing at least three months' worth of expenses to offset a monetary setback or unplanned major purchase. By contributing to a liquid fund such as a money market account, you'll help avoid charging expenses and racking up debt (see above).
3. Invest long-term. If you have your debts under control and emergency cash on hand, the next best move may be to invest long-term for potentially higher return. You may want to leverage your investment even more with a tax-advantaged option, such as an individual retirement account or your employer-sponsored retirement plan. A 401(k) plan that offers matching funds is essentially a source of free money. Check with your financial advisor to help determine the investment options that are best for you.
4. Remodel to increase your home's value. Your refund may not cover the cost of a major remodeling project, but consider using it to hire a professional to help determine what upgrades could bring the greatest return if and when you decide to move. Check out the Cost vs. Value Report at www.remodeling.hw.net for average amounts recouped. Be aware that the amounts apply to homes sold within a year of the remodel.
5. Refinance your mortgage to a lower rate.  If you're paying more than the market rate on your home loan, you may be able to save money each month by securing a lower rate.  If you're currently renting but looking to buy, start a down payment savings account with your tax refund.

Learn how to get your tax refund fast and free, and get help to file

With the new year comes tax season – a great time to turn your refund into much-needed cash. But instead of paying fees to a tax preparer for a speedy refund, use a deposit account you already have (or open one) so you won’t lose a penny of what you have coming.

The website www.freetaxrefund.org explains how you can access a free refund whether you prepare your own taxes, use a paid tax preparation service, or use any of the hundreds of sites around the state offering people with limited incomes free help to prepare and file their tax forms. The site explains how to use direct deposit to get a no-cost tax refund, where to find free tax assistance sites and what to bring for help with filing.

According to the Wisconsin Credit Union League, which maintains the site, every one of Wisconsin’s more than 2 million credit union members already has a savings account that can be used to receive a free tax refund. Those who don’t have an account can open one at a not-for-profit credit union by placing as little as $5 on deposit – far lower than what for-profit financial institutions require.

Many low-income filers – who seek a fast refund to pay bills and meet immediate needs – turn to paid tax preparers charging interest as much as 521% APR to obtain what’s called a "refund anticipation loan," or RAL. These short-term, high-interest loans – secured by the pending refund – can drain hundreds of dollars from a typical refund.

For example, a single worker making less than $32,000 and raising one child would qualify for a refund of as much as $2,600. But to obtain that refund using a RAL, the filer could pay more than $100 on top of a typical $150 tax preparation fee, losing more than $250 (a full 10 percent or more) of his or her total return. Put simply, if you use a RAL you’re paying dearly to borrow your own money.

Wisconsinites who took advantage of free tax assistance sites offering direct deposit in 2010, however, saved an estimated $14.8 million by avoiding RALs. Visit www.freetaxrefund.org to learn more.