ME Bank - Tips to get more from your tax return.

Simple strategies can help you get more bang for your tax refund buck.  For many of us, it won’t be long before a juicy tax refund arrives in the mail, and no matter whether you get a few hundred or a few thousand dollars back from the tax man, here are some ways that may help you turbo-charge the value of your refund.

 

Triple the value

Using your tax refund to make a lump sum payment on your home loan will add some serious grunt to the tax man’s cheque. That’s because the money comes straight off the loan balance. Depending on the size of your tax refund, it could significantly reduce the long term interest charge on your loan.

To see how dramatic the savings can be, let’s say, Bill - a plumber, uses his $2,000 tax refund to make a lump sum payment after the first year on his 25-year $300,000 home loan, with a variable rate of 5.88% p.a. paid fortnightly. This simple step will see Bill pocket savings of up to $6,600 on the cost of his loan, thereby tripling the value of his refund.

Save, add, grow

Alternatively, you could put your refund to work by kick-starting a savings plan. A ‘save, add, grow’ strategy can make it easy.

As a guide to how this works, we’ll say Liz - a hairdresser, receives a tax refund of $2,500. She uses the money to open an ME Bank online savings account paying 3.15% p.a. interest. That’s the ‘save’ part. Next, Liz adds to her savings by tipping an extra $50 into the account each week. Setting up an automatic funds transfer on the same day you get paid makes this step effortless.

The ‘grow’ part of the strategy is very straightforward. You just avoid dipping into your savings unless it’s absolutely necessary. At the end of 12 months, our hairdresser Liz could have accumulated a nest egg of around $5,220. After just five years she could have around $17,001 in her account, even more if she makes saving her tax refund an annual habit.

Set aside some ‘rainy day’ money

We all need some ‘rainy day’ money set aside for emergencies. So if your budget doesn’t extend to making regular savings, a term deposit is a great option. It’s also an ideal choice if you don’t trust yourself to avoid dipping into an at-call savings account. Just be sure to pick a term where you’re unlikely to need the cash as interest penalties generally apply if you access the funds early.

At present, if you are a member of an eligible super fund or union your tax refund could earn 4.55% p.a. on a 12-month term deposit with ME Bank. Even better, it’s a fee free investment.*

Get started today

Alternatively, you could put your refund to work by kick-starting a savings plan. A ‘save, add, grow’ strategy can make it easy.

As a guide to how this works, we’ll say Liz - a hairdresser, receives a tax refund of $2,500. She uses the money to open an ME Bank online savings account paying 3.15% p.a. interest. That’s the ‘save’ part. Next, Liz adds to her savings by tipping an extra $50 into the account each week. Setting up an automatic funds transfer on the same day you get paid makes this step effortless.

The ‘grow’ part of the strategy is very straightforward. You just avoid dipping into your savings unless it’s absolutely necessary. At the end of 12 months, our hairdresser Liz could have accumulated a nest egg of around $5,220. After just five years she could have around $17,001 in her account, even more if she makes saving her tax refund an annual habit.

Set aside some ‘rainy day’ money

We all need some ‘rainy day’ money set aside for emergencies. So if your budget doesn’t extend to making regular savings, a term deposit is a great option. It’s also an ideal choice if you don’t trust yourself to avoid dipping into an at-call savings account. Just be sure to pick a term where you’re unlikely to need the cash as interest penalties generally apply if you access the funds early.

At present, if you are a member of an eligible super fund or union your tax refund could earn 4.55% p.a. on a 12-month term deposit with ME Bank. Even better, it’s a fee free investment.*

Get started today

ME Bank’s free 10-minute Banking Health Check could help you make the most of your tax refund. If you would like to make contact with your local banker, please  This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

* This is general information only and you should consider if these products are appropriate for you. Interest Rates for the ME Bank Term Deposit are current as at 15 May 2013 and subject to change and an interest rate reduction will apply if the customer wants to withdraw money from the account before the end of the term. You will get the interest rate that applies to your deposit on the day your application is received. Terms and conditions available on request. A list of eligible super funds and unions can be found at mebank.com.au. ME Bank Pty Limited ABN 56 070 887 679.