Do I pay off the credit card?

[Gator8]

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... I’m 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%. I’ve 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 doesn’t really provide any benefits, points etc. Thanks in advance.

[Telecaster]

Why would you not pay it off?   

[plog]

Yes

[frugaliknowit]

No brainer:  8.9% risk free rate of return:)

[nereo]

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]

Thank you all for the feedback. I’m 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. I’m trying to change my way of thinking,  trying to appreciate the benefits of being free from any credit card debt. 

[acepedro45]

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]

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]

Thank you all for the feedback. I’m 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. I’m trying to change my way of thinking,  trying to appreciate the benefits of being free from any credit card debt.

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

[Enigma]

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]

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 isn’t logical but it feels like I’m 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 !

[Buffaloski Boris]

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 isn’t logical but it feels like I’m 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 !

That’s 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 I’d be less than honest if I said there weren’t some darn good arguments counter to that that I’ve seen here.

I’m 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]

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]

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.