Why You Should Invest Your Tax Refund in a Certificate

If you receive a tax refund, there are a few different options for how you can spend, save or invest your money. With the abundance of services and options available, you may be able to start investing at a low cost and reap the rewards of letting your money grow.

If your essentials are already covered, we can review some of the ways to invest your tax refund, including investing in a certificate.

What Is a Tax Refund?

Your tax refund is money that the IRS held for you after you paid taxes throughout the year. If you are employed, your employer will typically withhold a certain amount from your paycheck and remit this money to the IRS. During tax season, you can compare the amount you owed to the IRS with the amount that was sent to the IRS.

After deductions and credits, a tax refund is the amount that was overpaid to the government and is now owed to the taxpayer. Essentially, you are receiving your own money back. If you want to know how much you can expect to receive in a tax refund, you can use a free online tax calculator to estimate your potential refund.

What Is a Certificate?

A certificate is a savings tool you can use to grow your money. You can securely build your savings by earning interest based on the annual percentage yield (APY) when you open a certificate with us at Members 1st Federal Credit Union. This means you can use a certificate to earn additional money for depositing your money with us.

How much you earn from a certificate may vary depending on:

• Rate
• Terms
• Length of certificate
• Amount you deposit when you open the certificate

Typically, the longer your term length, the higher your dividend rate. So, the longer you commit your funds to a certificate, the better. Certificates offer a range of options for the APY, term and dividend rate, so you can find the certificate that is best suited to your financial situation.

4 Reasons to Invest Your Tax Refund

Using your tax refund for a luxurious vacation or a major shopping spree can be tempting, but there are several benefits to investing your tax refund instead, such as:

• Gain peace of mind: Perhaps the best reason to invest your tax refund is to gain peace of mind and a sense of security. When you know you have set aside the money you earned, you will gain confidence from making a solid financial decision and experience the peace of mind that comes with protecting yourself for the future.
• Prepare for unexpected expenses: Few things will make you feel more secure than being prepared for emergencies and major unexpected expenses. When you use your tax refund to prepare for unplanned costs, you will be able to cover that major car repair or continue paying your bills after a job loss.
• Meet short-term and long-term goals: When you invest your tax refund, you can achieve your short-term and long-term financial goals. For example, you can put your refund toward a short-term goal like saving for your next car or paying off a credit card balance. Alternatively, you can put your refund toward a long-term goal, like saving for a down payment on a home.
• Enjoy compounding dividends: The key to growing your savings is making your money work for you with the power of compound dividends. Compound means you earn interest on the amount you deposited, and then, earn interest on that interest. With compounding dividends, even a small investment can grow to a large amount over time.

What to Do with Your Tax Refund

Depending on the amount you receive in your tax refund, you may have several options available. Things to do with your tax refund include:

• Pay off debt: If you have high-interest or large debts like student loans or credit card debt, you may want to use your tax refund to pay down or eliminate debt. Use the avalanche method or the snowball method to pay off your debt. The avalanche method focuses on paying off the highest-interest debt first, while the snowball method involves paying off the smallest balance first.
• Save for a financial goal: Another possible use for your tax refund is putting your funds into a high-yield savings account. You can allocate this money toward a savings goal like a wedding, vacation, home or college tuition.
• Complete a home improvement project: If you have been putting off a necessary home repair or improvement project, your tax refund can be used to make your property more functional and increase the resale value.
• Invest in a certificate: Another great option is to invest in a certificate through Members 1st. We have great options available to you—whether you’re looking for a standard certificate, bump-up certificate or a no penalty certificate, we have you covered.

Why You Should Invest Your Tax Refund in a Certificate

A certificate is one of the safest ways to increase your savings. Below are some of the benefits of investing your tax refund in a certificate:

• Options to choose from: We offer several share certificate options, such as a 9-month, no-penalty certificate and our bump-up certificate. The terms we offer for certificates range from three months to five years.
• Loyalty rewards: At Members 1st, we thank members with loyalty rewards they earn over time.
• Protected savings: The National Credit Union Share Insurance Fund guarantees our share certificates.
• Empowering consultation services: Through our MyConcierge™ service, you can chat with a local Members 1st associate to figure out the certificate option that best fits your financial situation.
• Convenient mobile and online banking: Access your financial planning tools and funds anytime, anywhere via our digital banking options.
• Competitive interest rates and dividends: You may be able to achieve your financial goals with our rates that exceed the national average.

Open an Account and Become a Member Today

At Members 1st, we serve our members, associates and communities through support, empowerment and meaningful relationships. We’re here to bring a human approach to the world of finance. We make membership more rewarding by offering great rates, fewer fees and free services.

We offer four reward levels depending on your balance:

• Silver: Your total required balance is $2,500 to $14,999.
• Gold: Your total required balance is $15,000 to $34,999.
• Platinum: Your total required balance is $35,000 to $74,999.
• Titanium: Your total required balance is more than $75,000.

If you are interested in opening a certificate with us, all you need is a $500 minimum deposit. Learn more about the certificates available to our members at Members 1st, find a branch location near you, or open an account to become a member today.

The content provided is for informational purposes only. This is not to be construed as financial or legal advice.