When people are having trouble making minimum monthly payments they often see their income tax refund as a ready source of “catching up” but doing so can be the worst decision you can make. The reason is that unless you get enough money to actually pay down your debts to a manageable level, catching up is not going to cure anything, it is just going to be a waste of a refund.
Before deciding on what to do with your tax refund go over your household budget. Remember that Credit Card use is not an expense; it is just a way to pay for expenses. Your budget should be based on your actual net income and your actual expenses, no matter how those expenses get paid. Any surplus in your budget should be allocated to paying debt. Never write a budget on the basis of increased income unless pursuant to some law or contract your income MUST increase. Never write a budget based on lowering expenses unless you can prove that over the preceding 4 months you were able to go without whatever you are eliminating from the budget.
With average credit card interest rates n excess of 14%, there are few investments in the world today that can beat debt reduction. If you cannot be making payments sufficient to completely pay off your debts within 5 to 7 years, then you should seriously consider filing personal bankruptcy. Your income tax refund check is a great way to fund the attorney fees and costs associated with your filing a bankruptcy.