Tools on benefit's of settling credit card debt
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Dont Save When You Are in Debt.
 Human beings are peculiar animals. We don't always do whats best for us - rather, we do what feels best, and try to blank out any reasons why it might not be the most effective thing to do. Maybe that's why there are so many people who have both savings and debts.
Its a Matter of Psychology.
Sure, it makes you feel better to have savings. Saving feels like you're constructing a cornerstone for your future, while paying off what you owe makes you feel like you're giving your cash down a hole. That money is for the kids future, or for improving your house, or whatever else - and it's in an account gaining a valuable rate of interest. What can be unreasonable about that? Lots, if you have debts.
Dont Be Fooled.
There are about no savings institutions that will offer you interest rates as high as the ones credit cards charge. Heres something to think about: if you have $10,000 in a savings account making 5% per year and $5,000 on a credit card at an interest rate of 20% per year, how much hard cash do you have? After only five years, the answer is effectively $0 - your owings would have grown to about $12,500, the same total that your savings are currently worth.
You might not believe it currently, but it really is a good deal better to pay off your debt. If you used one half of your savings to pay off that debt, youd be in a much better position that it's really amazing. You avoid five years of compound interest on the debt, but you still get to hang on to $5,000 in your bank account, pulling in interest - after five years, that's roughly $6,380.
If youd still prefer to keep your savings intact rather than using them to pay off your debts, ask yourself this elementary question: is your pride worth $6,380 of your familys hard cash?
Think of Your Financial Health.
When you get sufficient cash to pay off your debt, theres absolutely no earthly reason to keep it. Debt is for people who don't have the money, and need to borrow it. Debt costs money, and savings make money - you want as much of your financial resources as possible to be savings, not debts. If your savings account and credit card are with the same banking company, then youre in effect paying for the privilege of borrowing your own money from them. Why would you do that?
There are additional advantages to lowering your debt with your own savings. Youll be less worried about your debts, and your credit statement will show that you were able to pay everything back - resulting in getting you a much better interest rate if you should need to go into debt in the future.
I know it can be hard. You just have to be mindful that any cash you've saved hasnt actually been saved at all. Its money you ought to have been spending instead of buying things with a credit card. Yes, it feels much worse to spend money thinking that youre spending away your nest egg - but always remember that when you use a credit card to spend that same amount of money, youre spending away your future, plus interest. In any case, if you've got the debt, then that cash in the bank has already been spent - stop denying it to yourself.
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