To determine which option makes the most sense, compare the interest you would earn by saving versus the interest rate you are being charged on your debts (credit card balances, loans, etc.). For example, if you would earn more by saving than what you would pay out to reduce debt, then saving may be the best option for you.
Save or Pay Off Debt
Save or Pay Off Debt?
Interest Savings on Debt |
Interest Earned on Savings |
---|---|
$ 132.02 | $ 15.18 |
By using your $50 per month to pay off debt rather than save, you will save $116.84 in interest charges and pay off your debt in 23 month(s) rather than your 24-month debt payoff term.
Amount | |
---|---|
Interest Savings on Debt | $ 132.02 |
Interest Earned on Savings | $ 15.18 |