Using your income tax refund to pay down debt can be a smart financial move — but some strategies may net a bigger payoff than others.
One in 5 taxpayers expects to use the cash toward a loan, and 28 percent will use the proceeds to pay bills, according to a new survey from TD Bank. A quarter of respondents said outstanding debt was their biggest hurdle to saving a tax refund.
The survey polled 1,213 taxpayers in early March, with a margin of error of plus or minus 3 percentage points.
It's no surprise that debt is a focus: At the end of 2016, the average household carrying debt owed $134,643, according to a NerdWallet analysis of Federal Reserve data. That includes an average $16,748 among households with credit card debt, and $49,905 among student loan borrowers.
The average income tax refund — $2,860 for tax year 2015, according to the Internal Revenue Service — could be a big help in staying on top of those bills.
"Paying down debt should be your number one priority," said Odysseas Papadimitriou, chief executive of comparison site WalletHub.com.