Facts on credit card debt credit fresh credit com
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Dont Save When You Are in Debt.
 Human beings are peculiar animals. We don't always do whats right for us - instead, we do what feels best, and try to blot out any reasons why it may not be the most effective thing to do. Perhaps that's the reason there are so many people who have both savings and debts.
Its a Matter of Psychology.
Yes, it feels better to save. Saving makes you feel like you're constructing a foundation for your future, whilst paying off your debts feels like you're giving your hard cash in to a hole. That money is for the kids education, or for doing up your house, or whatever else - and it's in an bank account bringing in a valuable rate of interest. What can be wrong with that? Lots, if you have debts.
Dont Be Fooled.
There are just about no savings accounts that offer interest rates anywhere near as high as the ones credit cards take from you. Heres something to think about: if you have $10,000 in a savings account realising 5% per year and $5,000 on a credit card at an interest rate of 20% per year, how much cash do you have? After only five years, the answer is effectively nothing - what you owe would have grown to in the area of $12,500, the same amount that your savings are currently worth.
You may not believe it at present, but it truly is a good deal better to pay off your debt. If you used half your savings to pay off that debt, youd be in such a better situation that it's really astonishing. You avert five years of compound interest on the debt, but you still get to keep $5,000 in your savings account, making interest - after five years, that's around $6,380.
If youd still rather 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 money?
Consider Your Financial Health.
When you get sufficient money to pay off your debt, theres absolutely no logical 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 need as much of your finances as possible to be savings, not debts. If your savings account and credit card are with the same financial institution, then youre in effect paying for the privilege of borrowing your own money from them. Why would you do that?
There are other advantages to paying off your debt with your own savings. Youll be less strained about your debts, and your credit statement will show that you were able to pay everything back - getting you a much smaller interest rate if you should need to go into debt in the future.
I know it can be hard. You just need to bear in mind that any money you've saved hasnt really been saved at all. Its money you should have been spending rather than making purchases with a credit card. Yes, it feels much worse to spend money thinking that youre spending away your nest egg - but always remember that whenever you use a credit card to spend that same money, youre spending away your future, plus interest. Anyway, if you've got the debt, then those savings have already been spent - stop denying it to yourself.
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