Should you pay off a credit card with your savings account?
“Do you have any type of introductory rate or special rate on the credit card? If it is a 0% interest rate card, or maybe you bought some jewelry that had 6 months no payments, or maybe furniture with 12 months no interest and no payments.
You’ve got to look at the amount of interest you’re wasting. Let’s say your credit card rate is 20 percent. If you had $3,000 on it a 20 percent, you’re wasting $600 dollar a year in interest.
You’re obviously not making $600 a year on your savings. Now I’m not an advocate of you having no money in savings because there may be a time when you need that cash.
If all you have is $3,000 in savings I would say no. If you had $6,000 in savings I’d say sure, take half of it and pay the credit card off.
Because most things in life you can put back on the credit card. Example, if all of a sudden tomorrow you have a flat tire or the air conditioning breaks, you could put that on your credit card. There’re very few things that are cash only that would require use of the savings account”
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