Advice on paying off credit cards as opposed to saving
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Should I save or try to pay off my credit cards?
Should I save or try to pay off my credit cards? credit card debt 7,000.00. My savings 3,500.00
The answer really depends on the interest rates you are currently charged on your credit cards.
You should evaluate the relative rates on your credit cards vs. what you earn on your savings account. If you earn (after tax) a higher rate on your savings than you pay in interest (& ALL fees on your cards), then keep the interest. That is a very unlikely scenario, though, unless you are in a teaser or 0% interest period on your credit cards.
If your cards' interest rates are really high, then I would recommend that you pay of the high interest credit card debt, but that does not mean that you spend all of your savings.
It is always good to have a rainy day fund for emergencies; otherwise, you will end up using credit cards again during the time of your need. Once you do pay off the credit cards, make sure to cut off the cards that you don't need and keep only one card for emergencies. Get out of the habit of using credit cards and start using either cash or bank debit cards for your spending.
I also think that one should always follow a budget. If you want to learn how to budget your household finances, steer clear of debt, and do not get caught up in the debt epidemic currently affecting the U.S. You need the complete Bills.com Free Personal Household Budget and Finance Educational Guide
I hope the information helps you Find. Learn. Save.
Best,
Bill
www.bills.com
Dealing with debt
Mortgages, credit cards, student loans, personal loans, and auto loans are common types of debts. According to the NY Federal Reserve total household debt as of Q4 2023 was $17.503 trillion. Housing debt totaled $12.612 trillion and non-housing debt was $4.891 trillion.
A significant percentage of people in the US are struggling with monthly payments and about 26% of households in the United States have debt in collections. According to data gathered by Urban.org from a sample of credit reports, the median debt in collections is $1,739. Credit card debt is prevalent and 3% have delinquent or derogatory card debt. The median debt in collections is $422.
Each state has its rate of delinquency and share of debts in collections. For example, in Arizona credit card delinquency rate was 3%, and the median credit card debt was $441.
To maintain an excellent credit score it is vital to make timely payments. However, there are many circumstances that lead to late payments or debt in collections. The good news is that there are a lot of ways to deal with debt including debt consolidation and debt relief solutions.
