Ok have 1400 in credit card debt and would like to get rid of it by december. is it a good idea to pay like $400-$500 a month on it or only put $300 and putting the rest in my savings. help me I am struggling with this
2006-07-29 11:57:17 · 8 answers · asked by Sam 2 in Business & Finance ➔ Personal Finance
the card actually is only 8.9% interest and I always make a payment of some kinds well over the min.
2006-07-29 12:02:00 · update #1
actually this month i am moving out of my parents house again. and only put 300 towards the credit card and 220 in savings so I could have a little extra spending money. I have my self on a tight budget and will be saving between 10-35% of my income any given month in a high yeild savings account and a regular savings account my bank has. right now the credit card as I have budgeted will be paid off my november
2006-07-29 12:19:26 · update #2
It depends on the current state of your savings.
If you already have adequate savings for emergencies, then pay down the credit first since you'll pay more interest on credit than you get on savings. Adequate is typcially defined as at least 3 months of living expenses.
Otherwise, save first, even though it will be somewhat more costly (your debt is not enourmous, so the interest charges will be somewhat high, but within tolerable levels). The reason is that you need some savings for the unexpected and you don't want to have to deal with emergencies by using more credit.
I don't know how in control your finances/budget are. Many personal finance advisors recommend that a person in a state of undisciplined spending learn to live on a budget (within their income), save a little and pay their credit down, in that order. Once that is under control, it becomes more obvious how much extra you can afford to pay on debt reduction.
This is actually a good problem to have; many people don't know if they can make their minimum payments and you obviously have some options here. It will just take a little patience. I am debt free now, but I had a couple of false starts when I tried to pay things down too quickly and ended up having to use credit unexpectedly since I didn't take care of the budget/saving first.
2006-07-29 12:08:32 · answer #1 · answered by Atris 2 · 1⤊ 0⤋
Pay as much of the debt as you can. If you can make a payment of $400 don't settle for $300. Credit card companies charge an interest of 15-20% even more in some cases. If you were to put your money in a savings account you would only earn an interest of 2-5% which much lower than the interest you have to pay the credit card company. If you were to put $100 in your savings account with 4% interest you would only earn about $.33 of interest after one month. On the other hand you will owe the credit card company $1.40 extra at the end of the month. On the other hand, you must make sure, you don't have to use the card again, if were to pay the company that extra $100. Bottom line is pay as much as possible without having to use the card again.
2006-07-29 19:01:21 · answer #2 · answered by organicchem 5 · 0⤊ 0⤋
Pay the maximum amount you can afford each month to pay off the card. The interest rate on the credit card is more than what you would earn by putting the extra money in a savings account. Even if you put it in an ING.com account. The interest rate is only 4.35% If you pay $500 amonth, you should have it paid off in no time, then put that $500 a month into savings.
2006-07-29 19:38:40 · answer #3 · answered by knittinmama 7 · 0⤊ 0⤋
Pay off the credit card debt as fast as you can. If you can pay more than $400-$500 a month, you should do that. You are paying a much higher interest rate than what you would receive on your savings.
2006-07-29 19:05:09 · answer #4 · answered by ? 6 · 0⤊ 0⤋
Definitely pay off the card first. Look at the interest percentage you earn on the money in your savings, versus the interest percentage you pay out on the credit card. OUCH.
2006-07-29 19:00:37 · answer #5 · answered by beadtheway 4 · 0⤊ 0⤋
Try to save some so you won't have to use the card. When you pay it off, get a Debit Card so you can only send what ya got...Good Luck....
2006-07-29 19:01:23 · answer #6 · answered by Anonymous · 0⤊ 0⤋
get rid of it as soon as possible, and get those scary credit card people off your back. i get into so much trouble by not really understanding those things.
2006-07-29 19:00:02 · answer #7 · answered by ttomnl 3 · 0⤊ 0⤋
Go to this site: http://www.daveramsey.com/
Don't do anything until you take Daves material
and put together a plan of action. It works everytime it's done.
2006-07-30 03:31:33 · answer #8 · answered by Anonymous · 0⤊ 0⤋