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Capital One Bank Survey: More than Half of Americans Who Will Be Receiving a Tax Refund This Year Plan to Spend the Majority of It
Thursday, March 06, 2014
Capital One Bank Survey: More than Half of Americans Who Will Be Receiving a Tax Refund This Year Plan to Spend the Majority of It09:30 EST Thursday, March 06, 2014
MCLEAN, Va., March 6, 2014 /PRNewswire/ -- With the April 15th tax filing deadline fast approaching, Capital One Bank (NYSE: COF) launched its annual Taxes and Savings Survey to find out how refund recipients are planning to use their dollars. According to the latest IRS statistics, the average federal tax refund this year will be $3,116, up 4.2 percent compared to 2013. Capital One's survey found that most Americans (80 percent) expect to get a refund and more than half of those (52 percent) plan to spend the majority of their refund.
Paying Off Debt Tops Use of Refund Money Although 52 percent of Americans who will be receiving a tax refund this year are spending the majority of it (as opposed to saving), that spending includes paying down debt. The majority (58 percent) will use the money to pay down debt or pay off bills. Other ways people are spending their refunds include:
- Everyday expenses or necessities (15 percent)
- A vacation (7 percent)
- Major purchase, such as a car, appliances, etc. (7 percent)
- New clothing or accessories (1 percent)
- A TV, iPad, smartphone or other electronics (1 percent).
Uncle Sam's Savers According to the survey, 40 percent of those people receiving a refund are saving the majority of it, which includes investing. For those who plan to save, many (32 percent) are using it to help plan for "short-term" savings needs such as an emergency or rainy day fund. Fewer consumers are saving toward "longer-term" goals such as retirement (15 percent) or a child's college education (8 percent).
"Four in five Americans are expecting to get tax refunds this year and most of them are already thinking about what they intend to do with the money," said Jim Kelly, Head of Direct Banking, Capital One. "Whether your goal is to save for the future, pay down debt to help get your finances in order or even to spend all or some of your refund on something important to you, planning ahead is essential to help keep yourself on track. A tax refund isn't a year-end bonus or magic windfall, it's the government giving you some of your own money back, so it makes sense to think carefully about how you plan to use it, putting that refund to work for yourself and getting on a path to save more and invest in your financial future."
Of those consumers who will owe taxes this year (9 percent), 34 percent say they will need to dip into their personal savings or emergency fund to cover the cost; however, just as many (35 percent) said they have set aside savings to pay for their owed taxes. Nearly one quarter (22 percent) will do an installment agreement or payment plan with the IRS. Only a handful will "draw down retirement funds" (6 percent) or pay with a credit card (4 percent).
Tips to Turn Tax Season into the Savings Season Capital One Bank offers the following tips for consumers on how they can boost their savings, whether it's making a savings plan for a tax refund or planning to set aside cash to pay taxes for next year:
- Pay yourself first. Use your refund to build your emergency fund so you're prepared for short-term needs that can come along unexpectedly. By depositing all or at least a portion of your refund into your savings account your building your savings cushion for the year.
- Strong rate, nice return. When reviewing your savings options choose the product with the best rate of return that matches your lifestyle and needs. The Capital One 360 Savings Account has a high rate plus extra savings tools, such as My Savings Goals, to keep you focused on your financial goals.
- Save regularly by setting up automatic transfers. One of the easiest ways to get into a routine of saving is to have funds automatically moved to your account every month or paycheck. Consider an online savings account that offers free transfers to and from existing accounts and set up automatic transfers in regular increments to ensure that money goes directly to savings. With an Automatic Savings Plan, such as that offered by Capital One 360, you can set it and forget it.
- Avoid unnecessary fees. When choosing a savings product, make sure that you're not losing your hard-earned cash to fees. Look for a product that offers no recurring monthly fees.
- Make the safest deposit. Make sure any savings tool you use is FDIC-insured.
Survey Methodology The findings reported in this release are from a telephone survey conducted by the market research firm ORC International (ORC). The survey was sponsored by Capital One Financial and conducted via ORC's CARAVAN Telephone Omnibus Survey. ORC completed 1,008 landline and cell phone interviews with US resident adults age 18 and older from February 13-16, 2014. The margin of error for the national sample is +/- 3 percentage points at the 95 percent confidence level. Sampling for this study was conducted using two national probability samples, one for the landline and one for the cell phone. All interviews were conducted using a computer assisted telephone interviewing system. Data were weighted to United States Census Bureau statistics.
About Capital One Capital One Financial Corporation (www.capitalone.com) is a financial holding company whose subsidiaries, which include Capital One, N.A., and Capital One Bank (USA), N.A., had $204.5 billion in deposits and $297 billion in total assets as of December 31, 2013. Headquartered in McLean, Virginia, Capital One offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients through a variety of channels. Capital One, N.A. has more than 900 branch locations primarily in New York, New Jersey, Texas, Louisiana, Maryland, Virginia and the District of Columbia. A Fortune 500 company, Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 100 index. Capital One 360 is a division of Capital One, N.A.
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