Should You Pay Off Credit Card Debt or Buy a CD in 2021?
Friday, 10 May 2024, 10:30
Credit Card Debt vs. CD: The Ultimate Comparison
The Best Financial Move
- For those with credit card debt, prioritizing debt repayment over buying a CD is crucial
- Interest rates on credit cards are significantly higher than the returns on CDs
Exceptions to the Rule
- In rare situations, like short-term financial needs or anticipating rate changes, buying a CD may make sense
- Understanding the opportunity cost of investing in CDs over eliminating credit card debt is essential
The Bottom Line
Paying off credit card debt takes precedence over investing in CDs for most individuals. While the allure of high CD rates is tempting, the hefty interest on credit cards overshadows potential CD returns. In the long run, extinguishing high-interest debt first paves the way for stronger financial stability.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.