Hey everyone,
I could use some advice because I tend to be a pretty indecisive person, and honestly, I sometimes overthink the worst when it comes to handling my debt.
Long story short: when I graduated college, I had about \$20k in credit card debt. Most of it came from living expenses, books, school costs, and even some dental instruments I needed for my program. Fast forward about a year and a few months—I’ve been chipping away at it consistently and now I’m down to about \$6–7k total.
Here’s where I’m at now:
- My credit score is still pretty low because of the high utilization.
- I’ve managed to build some discipline with saving, putting aside \$500–\$1,000 every month for the past 8 months.
- I’ve got a decent savings cushion now, but I’m torn on whether I should:
- Use my entire savings to wipe out the rest of my credit card debt immediately, or
- Continue paying it down gradually, one card at a time, so I don’t completely drain my savings.
I want to make the smartest move here for both my financial stability and my credit score, but I’m stuck overthinking the pros and cons of each path.
What would you do in my situation?
Ready to be Credit Card DEBT FREE
byu/kidgambinoj inCreditCards
Posted by kidgambinoj
4 Comments
Assuming the credit card loan interest rate is higher than savings interest rate, you should immediately pay off the credit cards with your entire savings. This allows you to stop paying high interests to credit cards.
Pay down the cards and make it your top priority while maintaining a sufficient emergency fund. Your saving is somewhere 4% APY. The credit card interest is 30%.
You can rebuild the savings way faster with no debt. I say pay it off today, then take whatever you were putting towards debt previously into additional savings until you’re back to feeling comfortable.
And congratulations on paying it all off. I hope you feel amazing for doing it 👍
You may want to look into any cards that offer 0% purchase and/or APR transfer APR. I’m thinking of Citi Diamond Preferred, Simplicity, and the like. That will give you time to pay off the debit without owing onerous interest.