Credit Card Debt VS Savings...

[edro]

I never really had a savings, until I started about 6 months ago, so my credit card debt and savings are about the same. Should I cancel them out and eliminate the credit card debt? Or should I not touch my savings, so I don't get in the habit of touching it?

I am thinking I should cancel them out because credit card interest (common sense), but I don't want to touch the nest egg

 

[Adul]

assuming you do not do accumlate more debt, i would do it.

 

[Mr N8]

I would pay down the CC debt. Don't know how much you have, but I would also keep at least $1000 in savings for the e-fund.

 

[waggy]

heh what good is the nest egg when you are in debt up to your eyebrows? CC are evil! EVIL!

I would pay them off and cancell them. Just keep one and pay that off every month (thats what i do)

 

[BatmanNate]

After your 6 month unemployment buffer, definately use the savings to eliminate the debt. There is no way your savings is earning you more interest than your debt is costing you.

 

[JetsFanatic]

Originally posted by: Adul
assuming you do not do accumlate more debt, i would do it.

Ditto

 

[Falloutboy]

payoff the debt but don't cancel the cards so you still have someplace to fall back on

 

[Falloutboy]

Originally posted by: BatmanNate
After your 6 month unemployment buffer, definately use the savings to eliminate the debt. There is no way your savings is earning you more interest than your debt is costing you.

6 mounth buffer!! god i'm lucky if I got 2 mounths

 

[spidey07]

yes, absolutely.

Unless you have very specific reasons for your savings - house, shaky employment, etc. and need the cash on hand.

otherwise the interest is just throwing money away.

 

[RossMAN]

WTF?

It's a no brainer, pay off the cc debt to $0 then start saving.

 

[kranky]

While it's important to have some savings available, I think it's better to abolish your CC debt and become accustomed to not having any. Too many people have CC debt because they got used to it.

Pay off your CC and then start saving, and discipline yourself to avoid carrying a balance on your CC.

 

[TheGameIs21]

here is the rule...

If you are paying more into any debt for interest than you are getting for the savings then pay off the debt. Otherwise you are losing $$.

 

[DrPizza]

Originally posted by: RossMAN
WTF?

It's a no brainer, pay off the cc debt to $0 then start saving.

And, cut up all but one card to use in the case of emergencies. And, needing a pizza on Friday night but being out of cash does not qualify as an emergency.
My wife and I have hit a point finally where we have no need to use a credit card. The only possible reason I might consider one would be for some sort of rewards program. I'd definitely be paying it off the day each bill arrived.

 

[RossMAN]

Originally posted by: DrPizza

Originally posted by: RossMAN
WTF?

It's a no brainer, pay off the cc debt to $0 then start saving.

And, cut up all but one card to use in the case of emergencies. And, needing a pizza on Friday night but being out of cash does not qualify as an emergency.
My wife and I have hit a point finally where we have no need to use a credit card. The only possible reason I might consider one would be for some sort of rewards program. I'd definitely be paying it off the day each bill arrived.

While I agree with the principal, the concept is flawed. Cutting up all but one cc will negatively impact your credit score.

Just make sure your other cc's do not charge an annual fee and keep them open. Discipline (which I admit I lack) is important.

 

[TheGameIs21]

Originally posted by: RossMAN

Originally posted by: DrPizza

Originally posted by: RossMAN
WTF?

It's a no brainer, pay off the cc debt to $0 then start saving.

And, cut up all but one card to use in the case of emergencies. And, needing a pizza on Friday night but being out of cash does not qualify as an emergency.
My wife and I have hit a point finally where we have no need to use a credit card. The only possible reason I might consider one would be for some sort of rewards program. I'd definitely be paying it off the day each bill arrived.

While I agree with the principal, the concept is flawed. Cutting up all but one cc will negatively impact your credit score.

Just make sure your other cc's do not charge an annual fee and keep them open. Discipline (which I admit I lack) is important.

My understanding and experience is that having the available credit is worse than canceling. I guess YMMV depending on your situation.

 

[TheGameIs21]

oops

 

[Ilmater]

Originally posted by: RossMAN

Originally posted by: DrPizza

Originally posted by: RossMAN
WTF?

It's a no brainer, pay off the cc debt to $0 then start saving.

And, cut up all but one card to use in the case of emergencies. And, needing a pizza on Friday night but being out of cash does not qualify as an emergency.
My wife and I have hit a point finally where we have no need to use a credit card. The only possible reason I might consider one would be for some sort of rewards program. I'd definitely be paying it off the day each bill arrived.

While I agree with the principal, the concept is flawed. Cutting up all but one cc will negatively impact your credit score.

Just make sure your other cc's do not charge an annual fee and keep them open. Discipline (which I admit I lack) is important.

Wrong. Cancelling a credit card or two to get down to one is fine. You need to have some room for unsecured debt, but if you have thousands of dollars of credit from a bunch of different cards, you could end up in trouble.

 

[Gibson486]

Originally posted by: Ilmater

Originally posted by: RossMAN

Originally posted by: DrPizza

Originally posted by: RossMAN
WTF?

It's a no brainer, pay off the cc debt to $0 then start saving.

And, cut up all but one card to use in the case of emergencies. And, needing a pizza on Friday night but being out of cash does not qualify as an emergency.
My wife and I have hit a point finally where we have no need to use a credit card. The only possible reason I might consider one would be for some sort of rewards program. I'd definitely be paying it off the day each bill arrived.

While I agree with the principal, the concept is flawed. Cutting up all but one cc will negatively impact your credit score.

Just make sure your other cc's do not charge an annual fee and keep them open. Discipline (which I admit I lack) is important.

Wrong. Cancelling a credit card or two to get down to one is fine. You need to have some room for unsecured debt, but if you have thousands of dollars of credit from a bunch of different cards, you could end up in trouble.

yeah, and having a bunch of credit cards open with no debt does not effect the score, but it does set some flags to lenders....

 

[FoBoT]

you need some small amount of emergency fund despite the CC debt

and you have to have the discipline to not run up new CC debt

good luck

 

[Mill]

Originally posted by: Gibson486

Originally posted by: Ilmater

Originally posted by: RossMAN

Originally posted by: DrPizza

Originally posted by: RossMAN
WTF?

It's a no brainer, pay off the cc debt to $0 then start saving.

And, cut up all but one card to use in the case of emergencies. And, needing a pizza on Friday night but being out of cash does not qualify as an emergency.
My wife and I have hit a point finally where we have no need to use a credit card. The only possible reason I might consider one would be for some sort of rewards program. I'd definitely be paying it off the day each bill arrived.

While I agree with the principal, the concept is flawed. Cutting up all but one cc will negatively impact your credit score.

Just make sure your other cc's do not charge an annual fee and keep them open. Discipline (which I admit I lack) is important.

Wrong. Cancelling a credit card or two to get down to one is fine. You need to have some room for unsecured debt, but if you have thousands of dollars of credit from a bunch of different cards, you could end up in trouble.

yeah, and having a bunch of credit cards open with no debt does not effect the score, but it does set some flags to lenders....

Both of you are wrong and Rossman is right. Having only one open account is a negative. Having only one open account not only is a negative, but having a balance on it will significantly impact your utilization which is ANOTHER negative. Put the cards in a sock drawer and do not use them, but do NOT cancel the accounts. Having amounts of available credit is not a negative to lendors unless we are talking over 250k of available credit, then it is possible for some creditors(namely Amex and Bank One) to cut your EXISTING lines. It won't be a reason for denial -- minus the oocasional lendor who is too conservative(some CUs and some incredibly picky companies which are rare).

 

[oboeguy]

Originally posted by: TheGameIs21
here is the rule...

If you are paying more into any debt for interest than you are getting for the savings then pay off the debt. Otherwise you are losing $$.

Spot on. Let's see, savings account at 1% interest, CC debt at 19% interest... yeah tough call there. :roll: Pay off the debt, foo'! If you "need" money after you're unemployed, then use the CCs. It's flat-out dumb to hold on to the debt without a specific and immediate reason for keeping cash around.

 

[Zanix]

Have a look here. Might help.

Text

 

[spidey07]

good god the misinformation is astounding.

www.fico.com

learn about what affects your credit score. Its not normally a good idea to close accounts - length of credit history is important.

 

[Night201]

Pay off the credit card. Then the money that you were/would have been putting into the payments, put into your savings every month.

 

[edro]

Originally posted by: Night201
Pay off the credit card. Then the money that you were/would have been putting into the payments, put into your savings every month.

Exactly... Thanks!