Make your tax refund work for you

You might be one of the millions of Americans getting a refund this year (hooray!). So far in 2025, the average federal income tax refund is about $3,170. 

Here’s how you can put that money to good use.

1. Pay down your debt 

Before you do anything else, pay down your high-interest debt. That’s because it’s this type of debt that’s costing you the most.

Case in point: credit cards. An average credit card can charge you about 23% interest on your unpaid balance.

• Suppose you only made the minimum monthly payment (about $25) on a $1,000 credit card balance. It would take you almost 11 years to pay off your debt, and you’d pay an extra $923 in interest.
• There’s no rule of thumb of how to tackle your high-interest debt — besides pay it off ASAP. If that means using your entire refund to pay it off, that’d be a great use of that money.

2. Save for a rainy day

You cleared your high-interest debt and still have some leftover refund money. Now what? Build up your emergency fund.

• An emergency fund is money you set aside to cover unexpected expenses. That way, you don’t have to take on debt or dip into your investments to cover your planned (like rent or groceries) and unplanned (like car repairs or medical bills) expenses.
• Aim to have 3 to 6 months of your living expenses saved in your emergency fund — this should cover rent, groceries, and other bare necessities. When you save in a high-yield bank account, you may be able to build your emergency fund faster. That’s because these types of accounts can offer APYs around 4%.

3. Invest, invest, invest!

While you’re saving in your emergency fund, consider investing some of your refund money.

• Investing can bring the growth you’ll need to reach your long-term goals. Let’s look at the numbers: the market has increased by an average of 10.4% over the past 100 years. 
• What does that mean in practice? Let's say you invested the average tax refund from above ($3,170). After 20 years of earning 8% annual returns, a conservative number by historical standards,  you've almost doubled your money! And that's not even counting what you've been steadily investing along the way. 

Acorns makes it easy to invest in your future once, but also again, and again and again — making it an automatic part of your budget.

All you have to do is pick how much you want to invest daily, weekly, or monthly. We’ll put that money to work in a diversified portfolio that matches your goals and objectives.