Pay off credit card or open an IRA?

I owe $3K on a credit card at a 14% interest rate. (It was at a 0% and i had used it to pay off a larger loan with a much higher rate. But now the intro rate is ending. Other than that I don%26#039;t charge on the card)

I have around $2500 that I was going to use to start an IRA. Am I better off paying down the debt or to start investing?

Pay off credit card or open an IRA?

Definitely get out of debt, then start putting money into an IRA each month. Check with Fidelity Investments, as you may be able to open a new IRA with $500 if you enroll in an automatic investments plan of $50 a month or more. Fidelity and their reps are really great ... I%26#039;ve used them for 27 years!

Don%26#039;t try to compare the interest rates... paying off the debt is a SURE 14% ... the market can do many things, and has not been behaving well lately. Stay debt free!

Pay off credit card or open an IRA?

Pay the debt first.

Pay off credit card or open an IRA?

pay off your debt first so ur credit and be good then worry about investing

Pay off credit card or open an IRA?

I would have to run the numbers, but I would think that paying off some of the loan and starting an IRA would be best. If you pay off your loan, you are saving on interest, but you are losing the interest you could have earned if you started an IRA. If you invest all of your money, you may be earning a good amount of interest, but you are also losing money on the loan. Plug the numbers in a spreadsheet and see at what level of investment and loan payment you can maximize your interest earnings and minimize your interest payments.

Time is your best friend for investing and your worst enemy in debt.

Pay off credit card or open an IRA?

Immediate reaction is to pay the debt first.

But, (and this is a LARGE but), that depends on a lot of factors other then just what you owe.

How old are you? How much longer before you retire?

Do you have other retirement savings?

What is your income? Are you currently putting away a portion of your net income every month?

If you are 20, and put $2000 into an IRA that pays an average of 5% a year for the next 40 years, you will have around $14,080 in the IRA when you are 60. (if you continue to feed the IRA, you will have even more)

If you put $2000 in the IRA, and take the other $500 and make a payment against the credit card, you will end up owing around $2500 on the card. Then if you pay of the remaining balance over the next 6 months, you will incur around $200 in interest.

But, that $200 buys you several things.

1. It will help boost your credit score and rating. Paying debt off over time is the best way to increase your score.

2. It will allow you to start saving for retirement, which will also look good when applying for a car loan, or mortgage.

Money is a tool, and tools cost money. If you learn at a young age to make money work for you, you will benefit in the long run.

Best of luck.

Pay off credit card or open an IRA?

What common sense does it make to save at 6% and pay out at 14% interest?

I love Fidelity too.

Pay off credit card or open an IRA?

Definitely pay off the debt. Chances are you won%26#039;t get 14% in a mutual fund. And remember %26quot; A penny saved is a penny earned%26quot; so think of paying of that debt as saving yourself 14% of 3000. Then get an emergency fund for a rainy day. Put that into a money market that should make around 4%. Then invest.

Read Financial Peace or The Total Money Makeover.

Pay off credit card or open an IRA?

ZiggyMa,

Suze Orman is the financial guru for the common folk, so check her website to double check with her at http://www.suzeorman.com. I do think she will say to pay off the high interest credit card first. An IRA won%26#039;t likely pay 14%, so you would be losing money to invest in the lower interest IRA. Also, I have heard Suze often say to leave the credit card open, even after paying it off.

Another option is to open another credit card with a lower interest rate, transfer the balance of the higher interest card, then pay the $2500 to it, leaving only the $500 on the lower interest card to pay. It maximizes your money, and gets you saving to start your IRA that much sooner.

Pay off credit card or open an IRA?

ALWAYS payoff debts FIRST.

Pay off credit card or open an IRA?

Always pay off the credit card first, particularly since you are paying 14% interest. It is unlikely you would get a bigger return in you put the money in an IRA.