Tax time is here, and with the majority of Americans expected to receive a tax refund, you could soon get a check for the money you’re owed by the IRS. While it’s tempting to think of your tax refund as extra spending money, it makes sense to put that cash to work instead.

And when you do, it’s important to use a savings vehicle with a meaningful rate of return. With today’s inflation rate hovering above 3%, you could be losing money if your interest returns are too low. 

Given today’s inflationary environment, it’s a good idea to look for options that offer 5% or more in annual returns instead. But where can you find those opportunities?

Earn more on your tax refund with a high-yield savings account today. 

How to earn 5% or more on your tax refund now

So how exactly can you earn 5% or more on your tax refund? Here are a few ways to do that:

Open a high-yield savings account

High-yield savings accounts work similarly to traditional savings accounts by offering a safe and accessible way to store your money. However, traditional savings accounts offer an average rate of 0.47% currently. But many high-yield savings accounts outpace inflation right now, and some offer APYs as high as 5.25% or more currently.  

“There are several benefits to having a high-yield savings account (HYSA),” says Michael Broughton, founder and CEO of ALTRO, a credit-building app. “Unlike stocks or certificates of deposit, HYSAs are typically accessible almost immediately, allowing you to deposit and withdraw from a HYSA as needed.” 

“Most importantly, HYSAs offer security,” says Broughton. “Unlike stocks or certificates of deposit, HYSAs are fully protected up to $250,000.” 

However, it’s important to keep an eye on your returns and shop around regularly. 

“Always check your accounts monthly or when your statements come in to make sure you are getting the top interest rate. Banks tend to change rates unannounced,” says Dawn-Marie Joseph, founder of Estate Planning & Preservation, a financial management firm. 

So, it’s likely a good idea to compare today’s high-yield savings account rates, even if you already have a high-yield savings account. 

Compare leading high-yield savings accounts now. 

Invest in gold

As an investment vehicle, gold has a long history of hedging against the impact of inflation. So, buying some of this precious metal may be a good way to invest the money from your tax refund. 

And, while the price of gold can fluctuate, especially over the shorter term, the value of gold tends to climb over the longer term and can easily surpass a 5% return rate. Over the past 20 years, gold’s price has grown by an average of 11.2% annually. 

Open a short-term CD

A certificate of deposit (CD) is a deposit account that allows you to lock in your interest rate for months or years to come. When you open a CD, you agree to keep your money in the account for the full CD term in return for a fixed interest rate on your money. And, many of today’s leading short-term CDs (with 1-year terms or shorter) are offering rates above 5% right now.

You could also opt for a longer term on your CD, but you may get a lower rate than you would with a short-term CD in today’s unusual interest rate environment. But even at a slightly lower rate, longer-term CD accounts offer a safe way to earn a meaningful return on your tax refund if you don’t need access to the money in the near future.

Take advantage of today’s leading savings opportunities now. 

The bottom line

If you’re getting a tax refund this year, you could use the money from that refund to improve your financial position by putting it to work for you. When you do, though, it’s important to earn returns that outpace today’s inflation rate. And, there are a few good options to do so, like opening a high-yield savings account, investing in gold or opening a CD now. 

Joshua Rodriguez

Joshua Rodriguez is a personal finance and investing writer with a passion for his craft. When he’s not working, he enjoys time with his wife, two kids, two dogs and two ducks.