Special Section: Tax Season 2011
Nearly 40 percent of people surveyed by a credit card company said they will spend all or some of their tax refund, but financial experts said spending all the money instead of shoring up personal finances is the wrong move.
Financial planner Judson Gee said a tax refund provides a golden opportunity to get ahead.
"We want to try to take care of some of that debt, want to pay some of that debt down that credit card," Gee said.
For example: if a consumer has a $3,000 balance on a credit card with an interest rate of 14 percent and decides to pay off the debt in full, he or she would lock in an instant return of 14 percent and get a credit score boost.
Consumers can also use their refunds to improve their homes by purchasing things like energy efficient windows.
Experts also suggest spreading the money around. For example, a consumer could put $1,000 in a retirement account, stash $1,000 in a college fund and set $1,000 aside for a rainy day.
Gee also recommends donating something from refunds to charity.
"It makes you feel good, too," Gee said. "It really does."