I have $10K I can leave in a CD earning 5% or pay off 2 high interest credit cards. What would you do?

Question

This morning The Husband reads the current news about Yahoo's Panama program and now wants to take $2800 and invest in Yahoo stock, and leave the rest in CD.
From Nenaclose1

Answer 1

I would absolutely pay off the credit cards first. No matter how solid the stock looks like, you should only invest the money that you can afford to lose. If you pay off a high interest credit card, it is the same as if you invested with guaranteed return that equals the credit card rate, and it is TAX FREE!!!
No stock or mutual fund manager can possibly match that kind of performance. After you're done with credit cards, you should put some emergency reserve into CD or a high yielding Savings account similar to Emigrant Direct or the like, after that you can start thinking of investing into stocks.

You have to take care of expensive debts first. BTW, once you stop paying interest on those cards, your cash flow will improve and allow you to put aside some more money.

Answer 2

Based on the information you give -- definitely pay off the high interest credit cards.

The stock might look good, but at a risk. Even IF it paid off, it's return probably wouldn't equal the negative interest of the credit cards, so you'd still owe money. It is sooooo rare for a stock to "take off".

Stay away from the "get-rich-quick" schemes.

Answer 3

If the interest rate on the credit cards is more than 5%, then you should pay off the credit cards. However, if you would like to have some cash on hand (for a future emergency), then perhaps pay off only one card (the one with the higher credit card rate) and save the rest of the money.

Then take the money you were using to pay off the now paid off card and pay that against your second card -- with that extra payment, you'll be able to get that paid off much more quickly.

Good Luck!

Answer 4

Why make 5% when paying off high interest credit cards is like making 17+% interest? Pay off the cards, then pay yourself the 17% or so the cards cost you and you will have even more to invest in Yahoo or whatever.

Answer 5

your husband wants to GAMBLE your money on one stock? can you say Erron? put a leash on him.
if you have 10k$ in a certificate of depreciation CD , when it is available. Take it out.
Put 1000$ in an emergency fund some place where you have to think to get it , not checking.
put 3000$ in a rainy day fund see above.
Now take the rest, list your credit (Slavery) bills Smallest to largest. Not highest % to Lowest %.
pay the smallest off Burn the card and close the account. take that payment apply it to next biggest bill - pay off burn card close account.
next larger bill etc etc. reason to do this you win more often allows you to win more.
visit daveramsey.com to learn what bankers credit cards pray you never ever learn and apply. Should you do this you will have gotten a real 20% per year return on your money. No Risk.

Answer 6

Well I guess I will pile on. Just like the ten answers above, you must must must pay off the credit cards first. You lose way too much money to the interest on the credit cards. And that doesn't include the potential damage it does to your credit report. If the CD guaranteed 20%, I would consider it. Otherwise, pay off those cards.

Answer 7

Use the 10k as partial collateral to get a lowest possible interest rate, higher limit credit card, and pay off both high interest cards with it, having some credit left, and keeping ur 10k.

Answer 8

Pay off the credit cards. Get rid of the debt. Get your finances in order so you don't get in debt again. Then invest the remaining money.

Answer 9

Pay the credit cards off.
Your best investment is live debt free.

Answer 10

Pay off your debts first. Once the debts are taken care of, you'll have more money for investing.