Скачать или смотреть WHY PAYING OFF CREDIT CARDS FIRST CAN COST YOU MORE MONEY PART 2

Many people struggle to pay off credit cards because most of their payment goes to interest, not principal. At an 11% annual rate on an $8,000 balance, the monthly interest is about $73. It feels expensive, but the real issue isn’t the rate, it’s understanding interest cost versus interest rate. Meanwhile, many people don’t think twice about paying hundreds or even thousands each month in mortgage interest.

Money is fungible. Cash in the bank and available credit are both forms of access to money. If you keep cash earning almost nothing while paying 11% interest on a credit card, you’re paying the bank to hold your money. Paying the card down with savings eliminates the interest, improves cash flow immediately, and the credit line is still there if needed.

For credit scores, paying high balances down helps, but keeping cards at zero long-term can actually lower your score. The sweet spot is usually 1-7% utilization. The bigger lesson is this: debt isn’t the enemy, interest is. When you control interest cost instead of just chasing low rates, you get out of debt faster and keep more of your money working for you.

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