Tax Refund Coming Your Way? These 3 Strategies Will Turn Your Tax Refund Into Something Bigger

Key Takeaways

• The deadline for filing your taxes on April 15 is approaching. You could be getting a refund. The average tax refund so far this year is a whopping $3,221.
• If you don’t urgently need the money, you can take advantage of today’s historically high interest rates to turn your refund into something bigger—and do it virtually risk-free.
• The best money market accounts offer 4.40% and the best savings accounts up to 4.60%. Both accounts allow withdrawals anytime.
• You can earn even more if you lock in a rate with one of the top CDs today for months or years. A CD will also encourage you to save your money instead of spending.
• Calculate your potential earnings using the calculator below.

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3 Smart and Safe Ways to Boost Your Refund

This tax season tens or millions of Americans might find they’re owed a significant tax refund. As of the week ended March 21, the average tax refund issued to date is $3,221. You can use that money for something worthwhile.

But if you're lucky enough to not urgently need the cash right away, you can take advantage of today's stellar interest rates to turn that refund into a more sizable sum—allowing you to do even more with it in the future.

Three easy and safe options to increase your refund include:

1. A high-yielding savings account that pays top rates
2. Money Market Account (MMA): A leading money market account in the nation
3. The top CDs in the country

You can find out how each option affects the refund amount.

Strategy #1: Increase Your Refund with a High-Yielding Savings Account

Put your money in one of the best high-yielding savings accounts. We rank the best-paying accounts every business day. The top rate currently is 4.60%, and 14 other options offer 4.35% or more. Compare this to the big banks, which pay virtually nothing or even just the national average rate of 0.41%.

Savings accounts let you deposit and withdraw at will, so you won't have to commit your funds for any particular duration. You can leave the money in your savings account for months, years, or even longer. You can withdraw cash whenever you wish, even if some banks charge fees.

What can you expect to earn? We can only estimate what you will earn in the future, since savings account rates may change at any time. But assuming the top savings account rate of 4.60% going forward, we lay out below how much you'd earn with different refund amounts over various timeframes.

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The rates on savings accounts are not guaranteed and are always variable. You can earn up 4.60% with the best account right now, but it’s impossible to predict how long this rate will last. You can read our discussion about where we think interest rates will be heading for the remainder of this year.

Strategy #2: Add check-writing with a top money market account

Money market accounts are very similar to savings accounts except that they allow you to write checks on paper. If you find this feature useful, a money-market account is a better choice than a standard saving account. If you don’t need this feature, choose the product that offers a better rate and/or additional features.

The best money market account in the United States pays 4.40%. This is a great deal. See our daily ranking of money market accounts for more options. There are almost a dozen other options that earn at least 4.00% annual percentage yield.

The amount you earn from the best money market account will be a bit lower than the amounts shown in the savings account table above, given today's slightly lower MMA rates.

Tip

All of our institutions for saving, money market and CD accounts are insured federally: by FDIC for banks, or NCUA for credit cooperatives. This means that federal insurance protects your deposits of up to $250,000. per person and per institution, regardless of the institution’s size.

Strategy #3: Invest in a CD to lock in a guaranteed return

Perhaps you won’t need your refund money—or at least some of it—for a while. If you’re willing to keep your money in a CD for a few months, a whole year, or longer, you can earn more. This is because unlike savings and money-market accounts, CDs provide a fixed, guaranteed annual percentage yield.

Right now, rates are high. If you lock in a high-rate CD now, you’ll be guaranteed to get one of the current rates for years to come. Our daily ranking of the top CDs in the country will help you find the best rates. APYs are currently in the mid-4%s for all terms.

You should choose your CD’s term carefully as you may be charged an early withdrawal penalty for withdrawing the funds before maturity. Choose a CD term that you are comfortable with to protect your earnings.

Tip

You can withdraw CD funds in an urgent situation, but the threat of a fine may encourage you to leave your money in the CD account for longer than if the money was easily accessible. That means CDs don't just boost your refund—they can also help you resist the temptation to spend the money on extra expenses.

Review our table below to see how much money you can earn if you save all or part of your refund on a CD.

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If you decide to save in a CD or a high-yielding savings account, make sure that some of your savings are kept in a flexible and flexible savings account. That way, if an unexpected expense or an emergency comes up, you can tap your savings account funds first—and perhaps avoid cashing out your CD and incurring a penalty.

Where are interest rates headed in 2025

It is generally expected that Federal Reserve will continue to reduce rates this year, despite the fact that it already reduced them in September, November and December 2024. The target rate currently sits at 4.25%–4.50%. However, the timing of and pace for 2025 rate reductions are highly uncertain due to the unknown impacts of policies implemented under the new Trump administration.

According to the CME Group’s FedWatch Tool at the time of this writing, financial markets are predicting the Fed’s first 2025 rate reduction will be announced after the central bank’s June 17–18 meeting. And by year’s end, a majority of interest rate traders expect we’ll have seen three rate cuts, for a 0.75-point reduction—down to 3.50%–3.75%.

Any Fed rate reduction will drive savings, money markets, and CD rates down. So before the Fed reduces rates, it's smart to snag one of today's high APYs while you still can.

Daily Rankings of Best CDs and Savings accounts

We update this ranking every day of the week to provide you with the best rates for deposits.

• Best 3-Month CD rates
• Best 6-Month CD rates
• Best 1-Year CD rates
• Best CD Rates 18-Months
• Best 2-Year CD rates
• Best 3-Year Rates on CD
• Best 4-Year CD rates
• Best 5-Year Rates on CDs
• Best High-Yield Savings accounts
• Best Money Market accounts

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Note that the "top rates" quoted here are the highest nationally available rates Investopedia has identified in its daily rate research on hundreds of banks and credit unions. This is a much higher rate than the national average which includes all banks with a CD of that term. This includes many large banks who pay pittances in interest. The national averages are usually quite low. However, the best rates can be found by shopping around. They are often 5, 10 or even 15 times more expensive.

How to Find the Best CD Rates and Savings

Investopedia ranks the highest-paying savings and CD accounts every day. It tracks rate data from more than 200 credit unions and banks across the country. For an institution to qualify for our lists it must be federally-insured (FDIC or NCUA for banks and credit unions) and the account must have a minimum initial deposit of no more than $25,000. The maximum deposit amount cannot be less than $5,000.

To qualify as a national bank, the bank must be located in at least forty states. Some credit unions may require you to donate $40 or more to a charity or association in order to join if you do not meet other eligibility requirements (e.g. you don’t work in a particular area or have a certain type of job). Read our methodology to learn more about how we select the best rates.

Article Sources Investopedia requires that writers use primary sources in order to support their work. These include whitepapers, government data, original reports, and interviews with experts in the industry. We also use original research from other reputable publications when appropriate. Our website contains more information about the standards that we adhere to in order to produce accurate and unbiased content. Editorial Policy

1. Internal Revenue Service. "2025 Filing Season Statistics—Individual Income Tax Returns. Week Ending March 21, 2025."

2. FDIC. "National Rates and Rate Caps." Published on March 17, 2025.

3. Federal Reserve Board. "Open Market Operations."

4. CME Group. "CME FedWatch Tool."