Why You Shouldn’t Get a Tax Refund

I just saw a commercial where you can get your tax refund put onto an H&R Block Credit Card. This is a dumb thing for you to do on so many levels.

First, if you’re getting a tax refund then you are having too much tax taken off your paycheck each month. This money is going to the government over the year instead of earning you investment income. You need to be applying for a tax reduction at source. This way less tax is taken off your paycheck, so you can put more into a retirement account each month. You can do this by telling the government you’ll be putting away a certain amount into a retirement account.

Second, if your tax refund is being put on a credit card it’s likely you will spend this money, rather than save it.

Third, you should only have one or two credit cards max. One for personal and one for business (if you have a business, and you should). This is for booking flights, ordering business books online and so on. Every department store and their dog has a credit card you can get and they usually entice you with some sort of discount (free shipping, $100 credit put on the card, etc). Once you get a new card, you basically can’t get rid of it without affection your credit score.