Should you continue depositing cash to your personal savings account or to your contingency fund while paying off your credit card debt? That depends on how much income you generate, on a monthly basis. However, many finance experts today discourage consumers from doing so. Let’s discuss why.
The Top Reasons
Certified finance experts believe that consumers should focus all their energies towards paying off their credit card debts, as soon as possible. After all, by prioritizing their financial obligations, they can avoid making substantial payments on interest as well as on other related charges. In fact, by putting your credit card bills on top of your list, you can gradually settle your credit card transactions and soon you can attain debt relief.
Furthermore, most savings accounts carry lower rates of interest as compared to the APRs found in a majority of credit card programs, nowadays. So, you will actually incur a bigger payment from the interest imposed on your credit card charges than what you will actually earn from your bank account. This goes to show that it would be wiser to pay off your credit card debt first before depositing cash onto your savings account, once again.
Still, if you’re anticipating a huge personal or household expense, or you’ve resolved to prepare for the future of your young children or for your retirement and you have a huge disposable income; then, you might as well continue saving cash.
Suppose you have saved a great deal of cash and you’re planning to withdraw ample funds from it to finally and completely settle your credit card debt. Would this be a wise decision? ABSOLUTELY! After all, by paying off your financial obligations, in one full-swoop, you can stop worrying about interest charges. In fact, you can eventually make the most out of your financial resources and more importantly you can start setting aside cash for your savings or your contingency fund.
Some Last Minute Reminders
- While paying off your credit card debt, it would be wise to put your credit card transactions on hold. Stop using your credit card temporarily so that you can avoid incurring an even bigger financial obligation. This can also work your advantage as it will help you avoid incurring additional interest charges, which could eat up a significant percentage of your personal or household budget.
- Transfer your balance to a zero- or low-interest credit card, especially if you wish to keep your interest payments minimal. Look for card programs that carry the lowest possible rates of interest and consolidate or merge all your existing balance on it. That way, it will be much easier for you to keep up with your monthly bills.
- If you think you don’t have enough funds to pay off your credit card debt completely then, we encourage you to apply for a debt consolidation loan. After all, this credit program can provide you with ample funds you can use for completely settling your financial obligations. Such loan also carries affordable rates of interest and flexible payment terms – features that will surely match the needs, preferences and financial capabilities of cash-strapped consumers, like you.