Getting a Tax Refund? Here’s How to Turn It Into Even More Money—No Risk Required

Earn 3% to 5% and Keep Your Money Flexible

Last year, the average U.S. tax refund was more than $3,100. Whether your refund this year will be a few hundred dollars or as much as several thousand, that lump sum represents money you can choose to spend—or put to work.

It doesn’t take long for a refund to disappear if it flows straight into your checking account and everyday purchases. If you don’t need the cash immediately, today’s elevated interest rates offer another option: Move it into a top-paying cash account and let it grow—without taking on stock market risk.

Right now, the top high-yield savings accounts are paying up to 5.00% APY, while the best money market account is offering 4.00%. Brokerage and robo-advisor cash accounts are meanwhile yielding roughly 3.3% to 3.6% on uninvested balances, with some firms advertising short-term promotional rates near 3.90% or 3.95%.

All of these accounts allow your money to earn interest while remaining fully accessible, making them a practical place to hold your refund if you’re unsure when you’ll need it. Even a modest balance can add up: A $3,000 refund earning around 4% APY would generate roughly $120 over a year—money you wouldn’t collect if it sat in a low-yield checking account.

CDs Let You Lock In a Guaranteed APY

If you’re don’t expect to need your refund money for a while, a certificate of deposit (CD) offers something savings accounts can’t: a fixed, guaranteed APY.

Savings, money market, and cash management accounts can lower their rate at any time, meaning there’s no way to predict what you’ll earn on that account next month or next year. A CD, meanwhile, locks in your APY for its full term. So whether you commit to a 3-month term, a 5-year term, or anything in between, your return is guaranteed until the CD’s maturity date.

Right now, the best nationwide CDs pay up to 4.50%, available on a 7-month term, with 3-month and 1-year CDs paying around 4.25%. Even longer-term CDs—from 2 years to 5 years—are still available near 4.00%.

The trade-off is access. CDs typically charge an early withdrawal penalty if you take your money out before the term ends. But if you can leave your refund untouched for a few months, a year, or even longer, locking in a guaranteed rate can provide predictable, risk-free growth.

How to Split Your Tax Refund for Flexibility and Steady Growth

You don’t necessarily have to choose between access and a guaranteed rate. Many savers use a simple split strategy to get both.

For example, you might keep part of your refund in a high-yield savings or money market account, where it remains fully accessible and continues earning a competitive APY. The rest could go into one or more CDs to ensure at least some of your money will continue to earn today’s high rates.

That approach lets you maintain a flexible cash reserve for unexpected expenses while putting a portion of your refund to work at a guaranteed APY. When the CD matures, you can then reassess, based on where interest rates stand and whether you’ll need the cash soon.

The Bottom Line

In today’s attractive rate environment, your tax refund can provide more than a temporary boost to your checking balance. With the right savings or CD strategy—or both—it can become a source of predictable, low-risk growth.