Should You Invest in spite of Your Credit Card Debt?

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Investing enables you to expand your finances. If you leave your money in a bank, it won’t do anything for you except gain you minuscule interest on your savings account. However, investing your money while having credit card debt isn’t necessarily the best decision either. Why is that? Simply put: the interest rate on most credit cards is typically higher than the estimated rate of return you get when you invest your money. Choosing to invest when you have credit card debt isn’t always a smart idea. An investment could bring in a surge of money to help you pay off your debt if you are lucky. However, if not then your debt will keep stacking up because of the interest and you could find yourself further out of pocket.

Am I losing money if I invest, in spite of my credit card debt?

The simplest way to comprehend this is by looking at the numbers. In other words, you should have a look at the return on investment. Some credit cards have interest starting from 17 per cent.

Thus, if you choose to do so, you could end up paying a higher interest rate due to your credit card debt. This will not bring you any earnings.

Unless you have a considerable amount of money directed towards investments, you’ll end up losing money. However, if you do have money at your disposal, it would be best to get rid of your credit card debt and only afterward proceed with the investment.

As soon as you finish paying off your credit card debt, you can maximise your earnings by investing. In truth, this is a fundamental practice for acquiring wealth. By combining savings and investments, you’ll reach a point where your money works for you.

How about saving for retirement?

Now moving on to retirement: does it make an exception to this rule? Yes. In fact, we find that it is highly recommended to invest in your retirement account via your work. After you have eliminated credit card debt for good, you can continue investing approximately 15 percent of your income.


For instance, after you have saved enough money for getting a home, a car, or any other significant purchase, you could start putting money aside for investments. We advise you to choose mutual funds; these enable you to diversify your investments, which is the key to success.

How do you start investing?

As a rule of thumb, if you aren’t acquainted with this procedure, you should ask for the assistance of a financial planner. He/she could aid you to plan wisely, to accomplish your financial objectives.

You could begin by using mutual accounts, as we pointed before. That’s because mutual accounts pose fewer risks, considering that they are shared by different stocks. In time, you could choose to invest your money in various ways. After you start to comprehend the way in which the market works, your earnings will grow.

Still, do bear in mind that it isn’t recommended to direct all your money towards a singular fund or share. Such a move is way too risky. Another option would be investing in real estate. However, bear in mind that in order to generate value, you should try to purchase it with cash, if possible.

To conclude, investing is a move that requires in-depth thinking and consideration. You shouldn’t go for it when you’re still in debt. However, when your financial status is on the right path, you should go for it (after carefully assessing your options, of course). Australian Lending Centre provides comprehensive financial advice, so if you want to start investing, you might want to talk to one of our consultants. With smart thinking and professional help, you might actually start reaping benefits.

And if you need to consolidate your credit cards to get rid of these debts, enquire with us today to find out how we can help you.

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