If you were lucky enough to receive a tax refund this year, you’ve probably been debating just how to use that money. Perhaps you’ve been daydreaming about a new big screen TV, a trip to Hawaii or a fun-filled day of shopping. However, if you’re hearing a little voice inside your head telling you to do something a bit more practical with that extra cash, consider this smart use for your refund: prepay bills! It may not be terribly exciting (okay, it’s not exciting at all), but by using that money to prepay your annual auto or home insurance, a few months of mortgage, car payments or even student loans, your mind will be put at ease and you’ll also save money. In fact, many businesses such as insurance companies give significant discounts when you pay your insurance in full, allowing you to free up that money each month for other expenses or investments while paying less to your insurance company overall. Other businesses, such as banks that provide mortgages and auto loans, offer discounts to those willing to sign up for automatic payments. Consider putting your tax refund in a separate account and signing up for automatic bill pay for one of the bills that offers a discount. Once you’ve depleted the account, you can cancel the automatic payments, but in the meantime you’ll save some money, have less bills to worry about, and have a little more wiggle room in your bank account each month.
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