Author Topic: Do I pay off the credit card?  (Read 869 times)

Gator8

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Do I pay off the credit card?
« on: April 22, 2019, 10:48:34 AM »
Hi all. I like to think that I am fairly responsible with my finances, but as a lurker on this site for several months and a new forum member as of today... Iím finding that I still have a lot to learn.

So here is my first question for the mustachian experts... should I pay off my last credit card? I currently have a balance of $1600 with a rate of 8.9%. Iíve been considering paying off the card for a while, but continue to hesitate. We have had some unexpected medical bills recently that have increased some expenses, but I am not currently using the credit card for any expenses at this point. Additionally the card doesnít really provide any benefits, points etc. Thanks in advance.

Telecaster

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Re: Do I pay off the credit card?
« Reply #1 on: April 22, 2019, 11:20:15 AM »
Why would you not pay it off?   

plog

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Re: Do I pay off the credit card?
« Reply #2 on: April 22, 2019, 11:26:52 AM »
Yes

frugaliknowit

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Re: Do I pay off the credit card?
« Reply #3 on: April 22, 2019, 11:30:17 AM »
No brainer:  8.9% risk free rate of return:)

nereo

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Re: Do I pay off the credit card?
« Reply #4 on: April 22, 2019, 02:15:15 PM »
I cannot fathom why you would not pay off the balance if able to do so.  Are there mitigating circumstances we should know about? Or are we just being trolled?

Gator8

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Re: Do I pay off the credit card?
« Reply #5 on: April 22, 2019, 04:03:45 PM »
Thank you all for the feedback. Iím definitely not a troll just a noob. I guess my only hesitation to pay it off has been because of all the recent medical bills for my daughter and trying to manage paying those bills while paying off the credit card. Iím trying to change my way of thinking,  trying to appreciate the benefits of being free from any credit card debt. 

acepedro45

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Re: Do I pay off the credit card?
« Reply #6 on: April 22, 2019, 04:08:43 PM »
Quote
I guess my only hesitation to pay it off has been because of all the recent medical bills for my daughter and trying to manage paying those bills while paying off the credit card.

Can't you just put any future medical bills on the same credit card if and when they crop up? If so, you should definitely just pay the card off now.

nereo

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Re: Do I pay off the credit card?
« Reply #7 on: April 22, 2019, 05:09:58 PM »
Quote
I guess my only hesitation to pay it off has been because of all the recent medical bills for my daughter and trying to manage paying those bills while paying off the credit card.

Can't you just put any future medical bills on the same credit card if and when they crop up? If so, you should definitely just pay the card off now.

Yeah, I'm still not getting your quandary.  If you pay off the credit card you will have that much more available credit sohuld you need to use it for future bills.  Hopefully you won't.

better late

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Re: Do I pay off the credit card?
« Reply #8 on: April 22, 2019, 10:01:06 PM »
Thank you all for the feedback. Iím definitely not a troll just a noob. I guess my only hesitation to pay it off has been because of all the recent medical bills for my daughter and trying to manage paying those bills while paying off the credit card. Iím trying to change my way of thinking,  trying to appreciate the benefits of being free from any credit card debt.

Iím going to guess that part of your hesitation is that it hurts to pay the cc off - I guess itís an emotional hurdle to push yourself over.

Buffalo Chip

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Re: Do I pay off the credit card?
« Reply #9 on: April 23, 2019, 11:03:19 AM »
I have to admit that Iíve been kind of taken aback by peopleís emotional attachment to their credit cards. I responded to a post a couple of days ago to someone who had a significant amount of CC debt and urged them to toss them in the shredder and cancel them, on the observation that theyíve had issues with CCís

The poster on that topic took it off the table. Didnít want to consider getting rid of their credit cards and didnít see their recent debt as anything other than an aberration. Future behavior is usually predictable based on past behaviors, but sure.

More direct to the OPs question and at the risk of being preachy, ChaseWellsFargoCitibankAMEX are not your friend. Those who use their services for cash management do so at their peril; these companies will drop clients and credit limits in a heartbeat. And often do that in times of generalized financial distress. The OP didnít indicate if they had one, but an emergency fund is really the answer here. Having that emergency fund avoids putting you at the mercy of credit card companies.

Enigma

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Re: Do I pay off the credit card?
« Reply #10 on: April 23, 2019, 11:24:32 AM »
I would pay it off and then pay it off in full every month.  Still safer to use your credit card for purchases than a debit card or walking around with large sums of money.  But you haven't given a lot of good reasons that the debt needs to stay on there.  There are a lot more missing details to your finances to determine if it is the best course of action.  For example other debts, emergency funds, etc.

Gator8

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Re: Do I pay off the credit card?
« Reply #11 on: April 23, 2019, 03:17:39 PM »
Fortunately we do have an emergency fund that we have been using for the medical bills. We have another surgery in a few weeks which I intend to continue to pay from the emergency fund and not a credit card. I think (@ better late) is onto something I think part of my hesitation to pay off the cc is the emotional hurdle... I know this isnít logical but it feels like Iím paying another decent sized bill. Again I joined this forum to start to change my thinking and improve some financial decisions. I will pay off the card shortly and enjoy being free of any credit card debt. Thanks all !

Buffalo Chip

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Re: Do I pay off the credit card?
« Reply #12 on: April 23, 2019, 04:05:08 PM »
Fortunately we do have an emergency fund that we have been using for the medical bills. We have another surgery in a few weeks which I intend to continue to pay from the emergency fund and not a credit card. I think (@ better late) is onto something I think part of my hesitation to pay off the cc is the emotional hurdle... I know this isnít logical but it feels like Iím paying another decent sized bill. Again I joined this forum to start to change my thinking and improve some financial decisions. I will pay off the card shortly and enjoy being free of any credit card debt. Thanks all !

Thatís great news!

I really do like being here as my carefully crafted habits and thoughts are frequently challenged. For example, Im definitely not a fan of equities as an investment right now, but Iíd be less than honest if I said there werenít some darn good arguments counter to that that Iíve seen here.

Iím not sure I dare put up a case study yet. That is the ultimate in forum badassity in my view.  Want to get my house in order first. 😁

nereo

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Re: Do I pay off the credit card?
« Reply #13 on: April 23, 2019, 05:11:24 PM »
While there's some disagreement on this, I would argue that if you are holding high interest debt (and 9% CC counts) while simultaneously holding an E-fund, you are best served liquidating the e-fund to pay off as much of the high-interest debt as you can.

The rational is that, at that point, the credit card has already become your e-fund, and a horribly expensive one at that. Once you have eliminated all high-interest debt (effectively returning you to $0) your next step should be re-establishing an e-fund to your satisfaction.


BicycleB

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Re: Do I pay off the credit card?
« Reply #14 on: April 23, 2019, 08:04:32 PM »
Does your income exceed your expenses consistently?
Are there higher charges (penalties, late fees, interest rates) than the 8.9% that you will pay if you are short of cash?
How much cash is in this "emergency" fund?

You should pay the credit card unless doing so makes it likely you will face a higher cost than the 8.9%.

If your income does not routinely exceed your expenses, you need to fix the underlying expense (or earnings & expense) issue.
 
Anyway, congrats on courageously posting. Go on and knock down that debt!

PS. Remember, once you pay off a card, they usually offer you more credit. You're not likely to lose a lot of options by paying off the card.