Islandia, NY, April 7—-According to the Cambridge Consumer Credit Index, nearly six out of ten Americans (59%) who have received or anticipate a tax refund this year plan to spend it on everyday purchases or make bill payments, down from 68% in 2004.
Of those surveyed, 31%, up from 27% in 2004, plan to save their refunds in a bank account or invest the money in stocks, bonds or mutual funds. This year, 69% of Americans expect to receive a tax refund, while 21% will owe money and 10% will not be paying any taxes.
"The results of the Cambridge Consumer Index wildcard question show that most consumers still plan to spend their tax refunds on everyday purchases, which should give the economy a short-term boost in coming months.
"However, more Americans plan to invest or save their refund money than a year ago, which shows an increased interest in putting away money for the future. Of those needing to pay taxes this April, it is remarkable that the percentage of Americans using credit cards has jumped from 3% in 2004 to 11% now. While some of those paying taxes with credit cards are probably doing so to earn frequent flier mileage and other rewards, others clearly are doing so because they don't have the money to pay their taxes and need to borrow from credit cards to settle up with Uncle Sam," says Jordan Goodman, spokesperson and financial analyst for the Cambridge Consumer Credit Index.
These findings are the result of monthly nationwide telephone polls of more than 800 adults, conducted by ICR/International Communications Research The most recent survey was made last week, and was sponsored by the Debt Relief Clearinghouse.
The overall Cambridge Consumer Credit Index fell by eight points from March to 51. The Index fell sharply on all three questions: past, present and future intensions question.
The "Reality Gap," which is the difference between the amount of debt consumers say they will pay off in the next month versus the amount of debt they actually paid off a month later, was 8 percentage points, down from 9 points in March. A month ago, 82% of Americans planned to pay off debt, while a month later only 74% actually did so.
