The tax deadline is rushing towards us – but it’s not too late to do your return. And it’s not too late for some savvy thinking about what to do with your refund (let’s hope for a good one!)
Members Equity Bank (a bank for all union members) has some simple strategies to help you get more bang for your tax refund buck.
For many of us, it won’t be long before a tax refund arrives in the mail. Here are some smart ways to turbo-charge the value of your tax cheque.
Triple the value
Using your refund to make a lump sum payment on your home loan is a real money spinner because the cash comes straight off the loan balance and, depending on the size of your refund, can significantly reduce your long-term interest charges.
To see how dramatic the savings can be, let’s say Liz uses her $2000 tax refund to make a lump sum payment after the first year on her 25-year $300,000 home loan, with a rate of 5.88% paid fortnightly. This will see Liz save up to $6600 on the cost of her loan, thereby tripling the value of her refund.
Save, add, grow
Alternatively, put your refund to work by kick-starting a savings plan. As a guide, we’ll say James receives a tax refund of $2500. He uses the money to open an online savings account with ME Bank, paying 3.15% interest, and then adds $50 to the account each week. At the end of 12 months, James could have accumulated a nest egg worth up to $5220. After just five years the balance would be around $17,001 – even more if he makes saving his tax refund an annual habit.
The security of ‘rainy day’ money
We all need ‘rainy day’ money for emergencies. So if your budget doesn’t extend to making regular deposits, it can make a lot of sense to use your tax refund to open a term deposit. At present, your tax refund could earn 4.55% on a 12-month deposit with ME Bank. Even better, it’s a fee-free investment.*
To learn more about ways to get more from your money, speak with one of ME Bank’s mobile bankers. Contact ME Bank on 13 15 63 or visit mebank.com.au.