In what could be bad news for companies across the accounts receivable management industry, a significant number of fewer consumers are choosing to use their income tax refunds to pay down their debts, instead opting to boost their savings, according to the results of a survey conducted by Bankrate.
This year, 28% of consumers say they are planning on holding on to their income tax refund in order to save it for a rainy day. Nineteen percent of participants in the survey said they are planning on using their refund to pay down their debt. It’s a flip-flopping of results from last year, where 28% of consumers said they were using their refund to pay down debt while 26% said they were saving it.
The 19% who are planning to use their refunds to pay down their debts is the lowest percentage for debt payoff in a decade, according to Bankrate.
“Many households would be well-served by putting some of their tax refund toward debt payoff and some toward savings,” said Ted Rossman, a senior analyst with Bankrate, in a statement. “While boosting savings is a noble goal, debt payoff is important, too. And credit card debt should be at the top of the list.”
Breaking down the data by age or by income level shows that no matter how the data is sliced, there is not a group of consumers that is prioritizing paying down debt ahead of putting money away toward their savings. The only income bracket where the two figures are close is among those earning under $50,000 per year — 23% are putting most or all of their refund toward savings while 20% are putting all or most of their refund toward paying down debt.
