A $3,500 Tax Refund Payment Reduces Credit Card Interest by $6,429

A taxpayer with a $5,000 credit card balance at a 23% interest rate saves $6,429 in total interest payments by applying a $3,500 tax refund to the balance. This reduction occurs if the taxpayer makes only minimum payments on the remaining $1,500 balance and ceases adding new purchases to the card. The IRS has paid out nearly 63 million refunds as of March 27 from 87.5 million processed returns. The average refund amount is $3,521, an 11.1% increase of $351 over the same period last year.