Tax season is in full swing and a poll recently run by Justmoney.co.za indicates that South Africans will be doing the smart thing with their returns.
When the website asked its users: "What will you be spending your tax return on?" 59% of respondents replied "pay off my debts".
Andy Gilder, general manager of the site is glad to hear South Africans will be putting money toward paying off their debts considering the most recent stats regarding credit active South Africans.
Gilder said: "Given that around 55% of credit active consumers in South Africa are in arrears, it's good to see any additional income is being put where it is most likely needed. I'm just not too sure that many South Africans will receive enough money back from SARS to put a big enough dent in their loans."
If you do have a nice lump sum coming your way however, Gilder says there are a few things that consumer can do.
"We need to get into the habit of putting spare cash toward our most expensive debts instead of spoiling ourselves. The upside of paying off expensive debt quicker is often far more significant than people realise and can often be a better return than putting the same money into a low interest bearing savings account. "
"When your most expensive debts are paid off, you can put the extra cash into your home loan - over the course of twenty years the savings can be massive."
The rest of the results were a bit of a mixed bag with 12% indicating they would invest the money and, while 12% said that they are not registered for tax. Ten percent of users indicated that they will be spoiling themselves with their tax return and seven percent indicated they will be spending what they get back on home improvements.