Americans plan to stash their tax refunds into savings this year, according to an annual survey released on Feb. 19 by the National Retail Federation (NRF).

A blank US goverment check with selective focus on the statue of liberty
Steve Frost, ThinkStock
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Forty-seven percent of those polled say they will save, rather than spend their tax refund, the highest percentage in the survey's history.

"We're still seeing a cautious consumer out there," said Pam Goodfellow, prosper consumer insights director at Prosper Insights and Analytics, the group  that conducted the poll for NRF.

Overall, about 66 percent of those polled are expecting a tax refund this year.

And while most will be saving their refunds, not everyone plans to take a trip to the bank:

  • 39.1 percent will pay off debt with their tax refund;
  • 25.1 percent plan to use their refund to cover daily living expenses;
  • 13 percent will spend it on a vacation;
  • 10.5 percent plan to make a major purchase, like a car or television, with their refund.

A large number of millennials indicated they plan to save their refund, with 54.9 percent of them planning to put their windfall into savings, while 32.2 percent will spend it on everyday expenses and 15.4 percent will make a major purchase.

Goodfellow said some young adults may have learned a hard lesson from struggling parents who were hit hard by the economic downturn during the last decade.

"Any extra money they have coming their way, they're going to look at it very thoughtfully. It's definitely easier for them to opt for savings and maybe start building that strong financial foundation that they saw that their parents didn't quite have in 2008 and 2009," Goodfellow said. "It appears that millennials are looking for ways to get ahead, and tax refunds represent the perfect opportunity for younger consumers to invest in their future."

The survey found 64 percent plan to file their returns online, and 37.4 percent will use their computer software to put their tax returns together themselves.

The survey is designed to gauge consumer behavior and shopping trends related to tax returns. The poll of consumers was conducted from Feb. 3 to 10 and has a margin of error of plus-or-minus 1.3 percentage points.

 

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