What are Americans spending their tax refunds on this year?

Smart Ways to Spend Your Tax Refund

Are you expecting a tax refund this year? If so, what do you plan to do with it?

If you're like most Americans receiving a refund from Uncle Sam this year, you'll use it to pay down some existing debt. That's according to a recent survey by GOBankingRates.com.

When asked "What do you plan on doing with your tax refund?" 5,000 respondents provided the following answers.

  • I do not receive a tax refund — 30%
  • Pay off debt (loans, credit cards, etc.) — 27%
  • Put in savings — 25%
  • Put toward a vacation — 9%
  • Make a major purchase (car, home, etc.) — 5%
  • Splurge on a purchase (TV, shoes, etc.) — 4%

The data was derived from responses to a Google Consumer Survey conducted from Dec. 30, 2015, to Jan. 1, 2016 and is representative of the online U.S. population with a margin of error of 1.8%. GOBankingRates also found only one in five Americans plans to spend tax refund money with respondents ages 18 to 24 twice as likely as baby boomers to splurge or make a major purchase with their refunds.

"It's really encouraging to see ... that most people are planning to use a tax refund to better their financial situation by saving or paying off debt," Elyssa Kirkham, the lead finance reporter on the study, said in a press release. "Using a tax refund this way will buy the taxpayer more financial security and peace of mind, instead of a one-off splurge that soon loses its value or is forgotten."

Making Good on IOUs

While receiving a tax refund can be a nice bump up in cash flow, getting a big refund means you essentially gave the government an interest-free loan, when you could have put the money in a savings or retirement account to earn interest. You may see that money as a windfall, but you should really see it as the government making good on a year-long IOU.

If you do get a refund, paying down debt— especially high-interest credit card balances— is a great way to use the money. You could also look into a balance transfer credit card or debt consolidation loan to minimize the interest associated with credit cards. (You can go here to find more about the best transfer credit cards in America.)

Paying down debt can also improve your credit. As you work on making payments on time and keeping your credit card balances low relative to their limits (some of the most important factors in credit scoring), you can see how your score changes by viewing your free credit report card, updated each month, on Credit.com.

Related: Important tax dates to know

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Important tax dates to know
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What are Americans spending their tax refunds on this year?

January 15, 2016: Those who are self-employed or have fourth-quarter income that requires payment for quarterly estimated taxes must have them postmarked by this date

(Photo via Tetra Images/Getty Images)

April 18, 2016: Individual tax returns are due for the 2015 tax year

(Photo via Alamy)

April 18, 2016: Requests for an extension on filling out your taxes must be filed by this date

(Photo by Chris Fertnig via Getty Images)

April 18, 2016: Those who are self-employed or have first-quarter income that requires payment for quarterly estimated taxes must have them postmarked by this date

(Photo via Alamy)

April 18, 2016: This date is also the deadline to make a contribution to an IRA account for 2015

(Photo by Garry L., Shutterstock)

June 15, 2016: Those who are self-employed or have second-quarter income that requires payment for quarterly estimated taxes must have them postmarked by this date

(Photo via Shutterstock)

September 15, 2016: Those who are self-employed or have second-quarter income that requires payment for quarterly estimated taxes must have them postmarked by this date

(Photo via Shutterstock)

October 17, 2016: 2015 tax returns that received an extension are due by this date

(Photo by Juan Camilo Bernal via Getty Images)

October 17, 2016: Today is the last chance to recharacterize a traditional IRA that was converted to a Roth IRA during 2015

(Photo via Getty Images)

January 15, 2017: Those who are self-employed or have fourth-quarter income that requires payment for quarterly estimated taxes must have them postmarked by this date

(Photo by Pascal Broze via Getty Images)

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This article originally appeared on Credit.com.

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