indy_peru asked:
I have a $1500 dollar credit card balance I cant seem to pay off. I have $1500 dollars in savings. Should I pay the credit card off or keep the cash?
I have a $1500 dollar credit card balance I cant seem to pay off. I have $1500 dollars in savings. Should I pay the credit card off or keep the cash?
you might as well pay it off with the money you have in savings… if you dont you’ll end up paying more interest and your total fee would end up being more than the 1,500 that you will be paying.
Well, with that much debt I would pay it off. The rate on the savings can’t possibly catch up to the credit card rate, and eliminating the debt now makes it easier to save again in the future.
You are probably paying 19 to 20 percent INTEREST on that $1,500 and you are only getting 3 or 4 percent on your savings… what do YOU think makes the most sense?
pay the credit card off
Pay some of it off and live on the rest of the money make it last.
Don’t use up all your savings to clear your credit card debt. Insetad pay half of the credit card balance ($750.00), and then make small monthly payments until you have cleared the remanining debt.
The smart thing to do is pay it off since I’m positve you are being charged a higher rate than you are being paid on your savings account. Also you can always get a cash advance on the credit card if you need that money at a later time.
It’s all a matter of interest rates. If the interest on the debt is higher than the interest you are getting in savings, then pay off the debt. If the debt is at very low interest but you are making good interest on the savings, then pay the debt off in some other way. If they are equal or close it doesn’t really make any difference, as the law of competing balances comes into play. The net value of the situation is ZERO, 1500 debt vs. 1500 asset. If you pay it off, your net value is still ZERO.
Keep the money. Those who run the credit cards depend on the interest you pay them to make a living, poor souls.
Do both, pay some of the the credit card and keep some of the cash. I agree with Pusykat1, lower your debt by paying off a big portion of the debt, but still keep some money in your savings account as an emergency fund. Say you pay off your debt and heaven forbid, an emergency were to pop up…how would you pay the bill? You’d have to charge it because you used up your savings, right? By having an emergency fund, you’d be able to pay for all or some of the emergency bill in cash, rather than charging the whole amount and therefore increasing your debt.
If you can pay 10% of the balance each month, it should be paid off in 11 months. If you can’t do that, then close the savings and pay it off. You can always start a new savings account once you get back on your feet.