The majority of Americans who will be receiving a tax refund in 2014 will spend the funds, not save them, according to a new survey released by Capital One Financial (COF).
Capital One's annual Taxes and Savings Survey conducted in February found that 80% of Americans expect to get a refund. The average federal refund will be $3,116, according to Internal Revenue Service, up 4.2% from last year.
Jim Kelly, the head of direct banking at McLean, Va.-based Capital One, said that consumers are more likely to spend much of their refunds than stash the funds in an investment or savings account. Fifty-eight percent said they intend to use the money to pay off debt, meet expenses, take a vacation or make a major purchase, like a car or new appliances.
Only 40% of the people receiving a refund plan to deposit it in a savings or investment account, according to the survey, and roughly one-third of that group say the savings will be used primarily for "short-term" emergency needs.
Few consumers surveyed said they have longer-term savings goals: Only 15% are looking at putting their refunds toward retirement and only 8% plan to put refund money into a child's college education fund.
Roughly 9% of the consumers who participated in the survey will owe taxes; and 34% say they will need to dip into their personal savings or emergency fund to cover the cost. Another 35% from this group however, said they have set aside savings to pay for their tax bills.
More than 1,000 customers participated in the phone survey.