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business Friday 8 april 2022
Use your tax refund to knock down debt, lift your finances

By LAUREN SCHWAHN of But paying down high-rate
NerdWallet debt is an important step
So you're expecting a tax in the right direction. And
refund this year. With infla- having lower debt com-
tion driving up the price of pared to your income can
gas, food and nearly every- improve your odds of quali-
thing else, that extra money fying for new credit.
can't come soon enough. IT CAN MOTIVATE YOU
The hard part is deciding Debt can be "a hurdle that
how to spend it. Should you people mentally need to
invest the money? Book a overcome before they can
trip? potentially go on to the
If you really want to do next phase, to start saving
yourself a favor, use your for goals," Mock says.
refund to pay off debt. Make a list of your financial
Here's why. goals. Maybe you want to
YOU'LL SAVE ON INTEREST buy a house or send your
"The cost of carrying debt kid to college. Eliminating
is very expensive," says debt can bring you closer
AnnaMarie Mock, a certi- to reaching those mile-
fied financial planner with stones.
Highland Financial Advi- Maybe your goal is sim-
sors in Wayne, New Jersey. ply to be debt-free. Even
"Especially if you're looking This Jan. 22, 2020, file photo shows the likeness of Benjamin Franklin on $100 bills in Dallas. if your refund isn't enough
at regular consumer debt, Associated Press to wipe out your debt all at
like credit cards, (the inter- ment, the total interest you highest (a strategy known comes for life in general," once, watching your bal-
est rate) could be north of pay would drop to $1,107. as debt avalanche), is says Tina Herndon, a finan- ance drop can build the
16%." You'd also wipe out the generally the quickest and cial education and training momentum you need to
Issuers do charge higher debt a year sooner. cheapest way to become manager with Balance, a keep chipping away at it.
rates, often well past 20%, With the Federal Reserve's debt-free. nonprofit financial educa- YOU DON'T HAVE TO SACRI-
depending on the type federal funds interest rate You can use a debt payoff tion and counseling orga- FICE FUN
of card or the user's credit hike in March, plus addi- calculator to estimate how nization based in Concord, Using your refund for debt
score. tional hikes expected later different rates and pay- California. repayment doesn't mean
Let's say you're trying to this year, debt is getting ment strategies will impact Paying off debt can get there's no room for fun pur-
pay off $6,000 in credit even more expensive. Most how much you owe. you ahead long term, she chases. In fact, by reduc-
card debt on a card with a credit card rates are vari- YOU CAN BUILD YOUR says, opening the door to ing debt you'll have more
19% interest rate by paying able, and issuers will likely CREDIT SCORE more affordable loans. "If funds available to do with
$200 a month. You'll pay raise them in response to Your credit utilization, or the you can pay 2.9% interest what you please.
$2,204 in total interest by the Fed's actions. Pay off percentage of your credit on a $25,000 car versus a Once you've paid off your
the time the credit card is more, or all, of your bal- limits you're using, is a big 21% interest, it's going to bills, you can take the
paid off. Here's how using ance now to avoid over- factor in your credit score. save you hundreds of dol- amount you were spend-
a tax refund could reduce spending on interest. Using a tax refund to shrink lars a month," Herndon ing on payments and put
that cost: If you receive a What if you have multiple your balance helps shrink says. it toward something that
$1,500 refund and put the debts? Accelerating pay- your credit utilization, which A drastic change in credit brings you joy. Boost your
full amount toward the bal- ments on the account with can benefit your score. won't happen overnight, entertainment budget or
ance, then continue mak- the highest interest rate first, "The higher our credit score, and there are other fac- start a vacation fund, for
ing the same monthly pay- then moving on to the next the lower the price be- tors that shape your score. example.q

Is inflation finally biting into

corporate profits?

By STAN CHOE months of the year. They’re were forecasting a loss of 68
AP Business Writer widely expected to say cents per share. By March
NEW YORK (AP) — Since that growth for the S&P 500 31, analysts downgraded
inflation began bursting will be the slowest since the their forecasts to a sharper
higher last year, big U.S. end of 2020. loss of $1.36 per share, in
companies have found a Analysts are forecasting large part because surg-
simple way to keep making a 4.7% rise in earnings per ing oil prices raised jet-fuel
record profits: Pass all those share from a year earlier, costs. That’s despite Delta’s
price increases along to according to FactSet. If saying in mid-March that it
their customers. they’re right, it would mark would likely make more in
But the formula may be the first time S&P 500 earn- revenue during the quarter
showing signs of reaching ings growth fell short of 10% than it earlier expected. Trader Robert Arciero works on the floor of the New York Stock
Exchange, Aug. 10, 2021.
its limit, which adds drama since the final three months Not only are companies’ Associated Press
to the upcoming earnings of 2020, according to Fact- costs continuing to rise,
reporting season. CEOs Set. Consider Delta Air but their customers may March from February, for services. After taking that
are lining up to tell inves- Lines, which next week will also be starting to balk at example, but the increase inflation into account, con-
tors in upcoming weeks be one of the first compa- paying the higher prices was entirely because of sumers reined in spending
how much their businesses nies to report results. When getting passed along. U.S. the higher prices consum- by more last month than
earned in the first three the quarter began, analysts consumer spending rose in ers paid for products and economists expected. q