According to Newsvine, the IRS is reporting that about 80% of taxpayers who filed their federal tax returns by mid-March claimed a refund. And the average refund is $2,380, up about 4% from last year’s average of $2,290

That’s a lot of money to be loaning to the government interest free. (Unless you’re Dick Cheney, who is expecting a $1.9 million tax return according to the NY Times.) That’s like overpaying $200/month.

According to this Simple Savings Calculator (I won’t embarrass myself by trying to calculate this stuff by hand), if you start with an initial amount of $0 and add $200 monthly at 4% (what ING Direct is currently offering), you’d have $2444.49 now. Ok, so an extra $44.49 in interest isn’t anything great, but over the course of 5 years, it adds up to $1259.80 in interest. At 10 years, that’s $5449.96 in interest.

For those that are getting money back, the article encourages you to pay off debt. Here are the top 3 recommended options:

- Pay down any high-interest credit card debt first.

- If you’re required to make estimated quarterly tax payments, apply your refund toward the next quarterly bill.

- Look at your long-term savings goals. If you have children, you can fund a college savings account. Or you can save for retirement with an Individual Retirement Account or a taxable investment account.