In poll after poll, Americans claim that they use their tax refunds to pay major bills or to augment their savings. But that belies what they really do, USA Today reports.
Retailers know that come March, April and May, consumers are flush with cash, so much as that it’s know as the “April problem,” said Arkadi Kuhlmann, chief executive officer of ING Direct. In fact, retail sales typically jump between 12% and 20% in those months from February’s levels, according to the Department of Commerce.
In fact, many companies, such as Lowe’s Home Improvement, launch advertising campaigns centered around tax refunds. “Tax refunds come around the time when people are gearing up for spring home improvement,” said Chris Ahern, a vice president with Lowe’s.
For mutual fund companies, that’s a challenge. “We’re in hand-to-hand combat to get people to wake up and save for retirement,” said Dan Houston, executive vice president of Principal Financial. However, he believes his company as “moved the needle of importance toward saving.”
“People see their refunds as a gift,” Kuhlmann agreed. “We’ve gotten over our Christmas hangover. We’ve had three months to dry out, and we’re ready to go at it again. Then we get a check from Uncle Sam.”
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.