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Tax refunds likely won't equate to big retail activity this year

More than half of consumers are planning to use tax refunds to pay off debt and shore up the savings account. Yet it isn't a complete bleak trend for retail.

February 22, 2016

Retailers hoping tax-refund time will translate to sales-bump time are likely going to be disappointed this spring as a new survey indicates more than half of American taxpayers getting a refund are most likely to bank the coin.

A National Retail Federation poll regarding consumer activity with tax refunds reveals 66 percent will be getting some sort of refund this year and 50 percent will drop it into the savings account. Another 35 percent will use it to pay off debt.

It's the highest numbers regarding savings and debt repayment activity with refunds in nearly a decade, according to a Bloomberg report.

Yet NRF President Matthew Shay notes any money saved represents potential consumer spend in the future. The survey notes 11.4 percent of consumers expect to use refunds for vacation. Electronics and auto purchases are the focus for 9.2 percent of refund recipients.

Bloomberg cites another survey, this one from NerdWallet, reveals the millennial consumers have even more robust savings plans for refunds, with 54 percent heading to the bank to deposit the cash. Yet 34 percent are aiming to spend refunds on vacation, home projects or a shopping expedition.