By: Katie Hand

If your tax refund has already landed in your account, you might be wondering what to do with it. Whether you received a few hundred dollars or a few thousand, having a plan can help you make the most of that extra money and set yourself up for greater financial stability.

1. Pay Down Debt

If you have credit card debt, consider starting there. Many credit cards charge interest rates around 20% or higher. Paying down even a portion of that balance can save you a significant amount in future interest. For example, using your refund to pay off $1,000 in debt could prevent hundreds of dollars in finance charges down the road.

2. Build an Emergency Fund

Once your high-interest debt is under control, think about setting aside some cash for emergencies. This could help you cover things like medical bills, car repairs, or a temporary job loss without relying on credit. A good goal is to save enough to cover three months of living expenses, but even a small start makes a difference.

3. Save for Retirement

If your debt is manageable and you already have some emergency savings, your tax refund could be a chance to boost your retirement savings. If you haven't started setting any money aside for retirement, now is a great time to start! You could use your refund to open or contribute to a Traditional IRA or Roth IRA. Even if you already have a 401(k) or another plan through work, adding to a personal retirement account can help you stay on track for the future.

4. Invest in a Home

If owning a home is one of your goals, your tax refund could help get you there. It might help cover a down payment, closing costs, or other up-front expenses. Many loan programs for first-time buyers require less than you might think, so it is worth having a conversation with a mortgage lender to explore your options.

5. Start a College Fund

If you are planning for your child's future education, using your refund to open a college savings account is a smart move. A 529 plan is one common option that offers tax advantages and room for growth over time. The earlier you start, the more your savings can grow through compounding.

Your tax refund is a great opportunity to make progress on goals that matter. Whether you want to reduce debt, build savings, invest in your future, or support your family, putting this money to work in a thoughtful way can make a major difference.

If you are looking to open a savings account, start a college fund, or learn more about home loans, City Bank is here to help.