Should I keep my savings or pay-down my credit card?
I have a little debt a House, 2 Cars, and 1 Credit Card with $12,000.00 @ 4% interest no additional fees. I have very little savings only $3,500.00. Should I take this $3,500.00 and make a payment on my Credit Card or should I keep my savings and just start making payments on my Credit Card? Starting Jan 1st I will be making 1,200.00 a month payments on my Credit Card to get it Paid in Full. Please advise what to do with my $3,500.00. Thanks
If $3,500 is your only savings, make the minimum payment on your credit card this month and hang onto your savings. I suggest this because a good general rule to follow is to have 30% or 50% of your monthly earnings as in a savings account. This savings should be set aside for emergencies and unexpected expenses.
See the no-cost Bills budget guide for more personal finance tips and advice.
I hope this information helps you Find. Learn & Save.
Did you know?
If you are struggling with debt, you are not alone. According to the NY Federal Reserve total household debt as of Quarter Q2 2022 was $16.15 trillion. Student loan debt was $1.59 trillion and credit card debt was $0.89 trillion.
According to data gathered by Urban.org from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1.739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 10% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.
Each state has its rate of delinquency and share of debts in collections. For example, in Delaware credit card delinquency rate was 4%, and the median credit card debt was $365.
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.