NEW YORK (CNN/Money) - Got a tax refund coming? Last year, taxpayers netted $2,033 on average -- and this year could be even better. Tax experts say refunds could rise to $2,500 this year...which begs the question what should you do with your refund?

Before you hop in the car and head to the nearest mall (there's probably not enough for a flat-screen TV anyway), check out today's five tips.

Okay, it's not as much fun as blowing your refund on a cool new gizmo or fancy weekend getaway for you and the family, but you can make a serious dent in your credit card debt.

CNNfn's Gerri Willis shares five tips on what to do with a tax refund. Play video (Real or Windows Media)

The average family carries some $9,205 in credit card debt. And your tax refund is a good way to wipe out some of it. The insidious thing about credit card debt is that it is so expensive.

Consider: The average standard interest rate charged on a credit card is 16.76 percent. Ed Sullivan of Bingham Legg Advisors says if you carry a $3,000 credit card balance and the rate is 18 percent, it will cost you at least $540 per year in interest.

What's your game plan if something goes wrong? Like your spouse loses his job? Or, maybe you get injured and can't work.

It's reasons like those that many people put together a rainy day fund that will cover three to as much as six months worth of spending needs. The amount you save depends on your personal financial circumstances and obligations.

For example, a household making $50,000 a year, should sock away at least $12,500 (3 months salary) in an emergency fund. Treat the fund as a monthly bill that you must pay. You will be able to discipline yourself to put the money away consistently.

You'll also want to make sure to put the money in a fairly liquid vehicle, such as a savings account, which will allow you to withdraw the money when you need it. To check out bank rates, go to www.bankrate.com.

Also, an emergency fund is a smart alternative to using a credit card to help cover a major expense. Using a credit card will just add interest to debt you already can't pay.

If you've been thinking about what might be the best time to start saving for your children's education, your refund may be your best opportunity.

Start by considering one of the many 529 plans offered by states around the country. 529s are investment vehicles sponsored either by states or educational institutions that allow parents to set aside money tax-free for educational purposes.

For the 101 on plans across the country, check out www.savingforcollege.com.

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If you're a grandparent and not a parent, you might consider opening a Coverdell account (formerly known as the Education IRA), for your grandkids. Coverdells work similarly to 529s in that your savings grow tax-free.

However, there's an important catch -- you can set aside just $2,000 a year in a Coverdell while with 529s the limits can range as high as $250,000 per beneficiary. Contribution limits to 529s vary by state.

As for a Coverdell, assume a three year old child will attend college when he/she turns 18. If you contribute $2,000 every year, for 15 years, with a 7 percent average total return, it would grow to $50,250!

Talk about a gift that keeps on giving: if you give your refund to charity, not only does it make you feel good, but you also get a tax break next year.

Whatever you do, don't simply give your refund away to someone who calls you over the phone soliciting you for a donation. Charity Navigator says there are one million non-profits in America, many of which have similar names and address the same issue.

For example, more than 650 groups were founded to combat breast cancer. You may have a hard time choosing between The Breast Cancer Fund and the National Breast Cancer Coalition. But Charity Navigator sees big differences in the way these two organizations spend money.

Log onto www.Charitynavigator.org to see ratings on individual charities, as well as information on how efficiently they raise money for their cause and whether administrative costs are reasonable.

Over the past few years, many Americans have been using their home as a cash machine. But leveraging your most important financial asset can be dangerous business.

Let's face it, if prices were to edge back in your market, it could create a problem for people who have borrowed heavily against their homes. With your refund in hand, however, you're in a great position to actually improve the value of your home by doing a few low cost fix-ups.

Among them is to get some curb appeal going. Simply adding some potted plants at the front door and painting your door may be enough. Upgrading the porch lights around your front door can go a long way to boosting your home's value.

One other option is adding a kitchen island. Many of the big do-it-yourself warehouses sell kitchen islands for about $700. Splurging on a granite countertop can boost the value even more.

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Another option: Consider hiring an architect to work out plans for a major reno of your house that may include a kitchen redo or the addition of a master suite.

And, finally, if your refund was much larger than the average, you should recalculate your withholding. The last thing you want to do is serve as a bank for Uncle Sam.

Gerri Willis is the personal finance editor for CNN Business News. Willis also is co-host of CNNfn's The FlipSide, weekdays from 11 a.m. to 12:30 p.m. (ET). E-mail comments to 5tips@cnnfn.com.