If there is cash burning a hole in your pocket, consider using it to pay off credit card debt rather than investing it. Though investing is a good way to plan for a secure financial future, freeing oneself of debt is an important step in the path to financial health, from a long-term perspective. Due to the current economic conditions, debt repayment is taking precedence over investing.

Review the rates of return for most investments and then review the creditor statements for outstanding debts. In most cases, these debts carry a higher interest rates than any investment returns currently being offered. This means that you are saving money by paying them off rather than investing the cash elsewhere.

It is helpful to organize the debt by creditor, amount owed, and interest rate. This allows high interest rate accounts to stand out and make it obvious that paying only the required monthly payment on these will incur higher interest charges. Set the card aside so that nothing further is charged and begin paying more than the monthly minimum.

If a card balance cannot be paid off quickly, transfer it to a card with a lower interest rate. However, make sure the rate is still lower after any transfer fees or initial transfer promotional periods have ended. This way, if the loan is not paid off within the promotional period, the rate will still be lower than what it is now.

When considering types of accounts, look at installment versus revolving accounts and first pay off the revolving accounts. If an installment loan does not feature a prepayment penalty, it can then be paid. Otherwise, begin investing the extra money in high-yield vehicles. It is often smart to continue carrying home equity debt through its original ending date because it is tax deductible.

Keep learning more:

1. Why Paying Off Debt Is An Investment


2. How Credit Cards Are A 15%+ Anti-Investment


3. Inflation is the Biggest Risk of Bond Investing


4. Money Market Rates: Find The Best Money Market Rates


5. The Advantages of Investing in Bonds


6. What Is Dividend Investing


7. Disadvantages of Investing in a Mutual Fund

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