More than 80% of Americans receive tax refunds, and the average refund was approximately $2,800 in 2015, according to an analysis from Morningstar’s HelloWallet.
Using transaction data from HelloWallet users, Consumer Finance Expert Aron Szapiro found that most workers spend their tax refunds; only 37% saved their tax refunds in 2014.
And, the larger the refund, the more an average worker spent. Every dollar increase in the tax refund was associated with an average increase of 71 cents in spending. The data suggests that workers regard their tax refunds as a windfall that entitles them to spend additional money—and some may deliberately withhold more taxes than necessary to save for large purchases.
Sixty-three percent of HelloWallet users spent at least a portion of their refunds; 38% made large purchases. Of those workers who spent their refunds, 73% increased spending the month after receiving a refund.
Spending categories with the highest increases—excluding paying down credit card debt—were travel, with a 67% increase; home goods (63%); and clothing (53%). But, approximately 25% of workers paid down credit card debt using their tax refunds. The average credit card payment among workers who used their refunds to pay down credit card debt increased by slightly more than $2,000, or 145%.For more information, including a copy of the report, visit http://www.hellowallet.com/tax-refunds/.