Better to pay off credit card or keep saving and maintain CC debt?

[rchl3321]

Hi,

I got a new job this year that has allowed me to save heaps of money for the first time.

I have an outstanding credit card debt that is significantly less than the money I’ve saved - I’ve been paying it off partially every month alongside putting away savings into my saver account.

Is it better for me to use some of the money I’ve saved to become debt free on the CC, or to keep adding that money to my savings account accruing interest while making payments above the monthly minimum on my CC (hence avoiding accruing interest on that debt w/o it being totally gone) if that makes sense?

 

[valshantal]

@rchl3321 Mate….unless the interest rate on the credit card is a promo 0% or close to it for a limited time, pay the credit card debt off ASAP.

I don’t understand why you haven’t paid it off the moment you had the the spare cash to do so instead of putting that spare cash in a savings account and then having to pay extra tax on the interest from that savings account while accruing more debt on your credit card at a likely ridiculous interest rate.

 

[rchl3321]

@valshantal This makes zero sense to me

 

[andy99]

@rchl3321 Either you are a troll or in line for dumbass of the year award. Either way, I am amazed you were even able to get a credit card. Bar is low indeed.

 

[valshantal]

@andy99

I am amazed you were even able to get a credit card.

On the contrary, credit card providers love customers like the OP. They’re the ones who make them $$$ on the product. As long as they don’t default on the debt and are just making minimum payments(or even above minimum payments) on the card, they’re basically the golden goose who keeps laying golden eggs for the credit card company, every month…

 

[rchl3321]

@andy99 What do you mean? I’ve had the card for years, I don’t have bad credit

 

[shawn4145]

@rchl3321 If you're paying just the monthly minimum that means you aren't paying off the capital and you're just paying interest every month.

So if you extend this to 2 years and lets say your monthly minimum is 100$ you will have paid 2400$ that you didn't have to over 2 years.

But if you pay off your debts with the savings, this 2400$ is not something you'd have to pay.

CCs generally have very high interest rates so you shouldn't be keeping debt on it.

 

[tiavina]

@rchl3321 What is the interest rate on your credit card? What is the interest rate on your savings account?

Whichever is higher, that is where your money should go.

 

[maximum7]

@tiavina We all know the interest rate on the credit card is between 20 and 30% and the savings account is below 5%.
Op is really bad at math, new to considering finance, or a troll.

 

[tiavina]

@maximum7 I hope it's not the last one of those - the other two can be worked on and strengthened. Looking at some other replies OP has made to those trying to help... hmmmmm.

 

[jeffr0x]

@rchl3321 Why would you not pay it?

What's better? $1000 debt at 15% (or more) interest a year or $1000 at 5.5% interest a year (and taxed on top of that)

Unless you are in the interest free period, you're paying interest on your balance which is calculated daily

If you have to think about it, maybe a credit card isn't for you

 

[cubc]

@rchl3321 Top tier trollin'

 

[daniel3112]

@rchl3321 Pay the whole CC balance off, if full, every month

 

[pouliozil]

@rchl3321 Pay off all the credit card debt and then cancel it.

Based on your nonsensical comments, you are too dumb to own a credit card.

 

[guidedbythelight]

@rchl3321 The question you effectively just asked is "Do I want to pay 30% interest to earn 5% back?"

 

[libiya]

@rchl3321 Are you kidding?? You are paying HUGE interest on the CC, which can be up to 28%

You earn maybe 4 or 5 % interest on your savings.

Sooooo you are losing big time. ( depending on CC balance )

Pay off the CC asap. Then save hard into your savings.

Salary sacrifice into super as well, while you're young.

 

[rchl3321]

@libiya I’ve saved 10k since start of year

 

[libiya]

@rchl3321 Great work!

 

[amoskaeg]

@rchl3321 Clearly a troll

 

[glenarden]

@rchl3321

Better to pay off credit card or keep saving and maintain CC debt?

Is this a legit question or are you taking the piss?