It’s official! Our government has approved tax rebates that we can expect to start seeing around late May to early June. Those who are single, with no children, can expect around $600.00 and married couples with children can expect about $1,200.00 plus an additional $300.00 per child. Credit counseling agencies are urging their clients to spend their money wisely.

Here are some suggestions to stimulate the economy if you decide to use this extra money as it is intended:

• Are you currently spending money every day on expensive coffee? Investing in a gourmet coffee maker should save you in the long run if you use it instead of purchasing a $3.00 cup of coffee from Starbucks or Caribou everyday.
• If you go out to the movies frequently, invest in a home theater system and watch movies at home instead of going to the movie theater.
• Home improvements are another good investment and could help to lower your utility bills if you purchase new windows or insulation.
• With gasoline prices at an all-time high, perhaps getting some vehicle maintenance done will improve your car’s performance, which should improve gas mileage.

Credit counselors also suggest saving your money or reducing debt as an option.

• Always pay off credit cards with high interest rates first. The idea is to pay down debt that could increase due to fees and high finance charges.
• Deposit the money for an emergency fund. Credit counselors suggest having at least 3 months worth of saved income set aside for emergencies.
• Start a college fund. This is an opportune time to start a college fund, especially since you may be receiving an additional $300.00 per child.
• Have you started saving for retirement? If not, this is a perfect time to start, especially if your employer offers something like a 401(k) plan that matches a part of your contribution.

Opportunities like this are not likely to be offered again so we should make sure we make the most of this one-time payment from the government. Credit counselors warn that there are scams already out there. As always, be careful anytime someone asks for personal information like bank account info or your social security number as the IRS has announced that they will not be contacting you for this information through email or telephone. If you receive a questionable e-mail, do not open it! Be sure to forward any questionable e-mails to phishing@irs.gov.

Sure, we’re all looking forward to our tax returns this year but would you be willing to pay a triple-digit interest rate to get your own money about 10 days earlier? Well any credit counselor will tell you, that’s exactly what you will be doing if you take out a Refund Anticipation Loan or RAL.

Many of the advertisements that you see that claim to be “Instant Refunds” or “Rapid Refunds” are really RALs and are mainly targeted to those with lower incomes. If you are struggling financially but are still thinking you might need to take out a Refund Anticipation Loan, ask yourself this first: “Why would I pay someone to loan me my own money?”

Don’t give a large chunk of your hard-earned cash to someone else to get your tax refund a few days earlier than you would if you file with the IRS directly. Most credit counselors advise it pays to be patient and wait for just a few more days. You can try speeding up the process by filing your tax return electronically with E-file or have your tax return sent directly to your bank account with direct deposit.

You may also want to consider reducing the amount of taxes withheld from your paycheck but it is highly recommended that you see a tax professional before doing so. This may enable you to put more money in your pocket each pay period, rather than receiving a large refund at the end of the year. This may prevent you from relying so heavily on your tax return in the first place.

If that isn’t enough to sway you from taking out a Refund Anticipation Loan, credit counselors warn: this is a loan that must be repaid. If your refund is denied, delayed or if your return is smaller than expected, you will still be expected to pay the loan back. If you are unable to pay, the lender might send you to collections, hurting your credit as a result.

Bottom line: Refund Anticipation Loans just aren’t worth it!