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5 Ways to Avoid Blowing Your Tax Refund

The IRS is expected to send out more than 100 million tax refunds this year. If you’re among the recipients, you owe it to yourself to put the money to good use.

You can sock it away in retirement savings, pay off debt or even spend a little and set the rest aside until you have a game plan -- just avoid a splurge that you may regret later.

Here are five ways to outsmart yourself from unwise spending.

Let the IRS deposit your refund. The IRS can deposit it directly into as many as three bank accounts. For example, you can assign a portion to checking and use it to pay down high-interest debt. Put as much as possible into savings, recommends Greg Hammer. “When it comes to spending, it’s out of sight, out of mind for most people,” the Schererville, Indiana financial advisor says.

Deposit it yourself — fast. If your refund is coming by mail, snap a photo and deposit the check using your bank’s mobile option. If your bank doesn’t offer mobile services, consider finding one that does. Banks may limit daily mobile deposits to $1,000. For larger refunds, go with Uncle Sam’s direct deposit.

Focus on peace of mind. Stow your refund in a savings account for an emergency, allowing you to gain a sense of security and earn a little cash. Savings rates are low — the average annual percentage yield is only 0.06 percent, according to the Federal Deposit Insurance Corp. — but some accounts earn more. Online accounts, such as those at Ally or Barclays, don’t require a minimum balance and earn an APY of 1 percent. If you put $3,000 — close to the average refund so far in 2017, according to the IRS — into a savings account with a 0.06-percent APY, you’ll earn $1.80 in a year. But a 1-percent APY would mean $30.14. That’s more value for your money, Hammer says. If interest rates continue to rise, you’ll earn even more.

Reach for multiple goals. Some banks and credit unions allow you to open separate savings accounts to jump-start multiple goals. Capital One 360, for example, lets customers have up to 25 savings accounts, with nicknames such as “Summer Vacation” or “Car Down Payment.”

Think long-term. If you put your refund into a retirement account, such as an IRA, the money will grow over several years, plus contributions to some accounts may be tax-deductible. Depositing money in an account now may help lower next year’s tax bill.

Put a plan in place now, and you’ll thank yourself later.

This article was written by NerdWallet and was originally published by USA Today.