In the United States, 110 million people have some type of credit card debt
“You can’t go through life borrowing money at those rates and be better”: Warren Buffett.
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JOHANNES EISELE / AFP / Getty Images
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In the United States, 59% of people who have a credit card have some type of debt that was acquired before the arrival of the coronavirus pandemic, according to a survey developed by CreditCards.com.
That percentage of Americans translates into 110 million adults who have some type of credit card debt and if you have the resources to pay your balance it is better to do it as soon as possible. That’s the recommendation of Warren Buffett, Berkshire Hathaway’s top investor, who gave during the annual shareholders meeting in Omaha, Nebraska.
Related: 6 valuable things you can do with your credit card to save money.
The recommendation came, Buffett says, after a friend asked for advice when he received money from financial aid. The investor asked him whether or not he had debts on his credit cards, to which he replied that he was and that he was paying 18% interest.
“If you owe money to 18% The first thing I would do with whatever money I had is pay itIt will be much better than any investment idea you have, “said Buffett.
“You can’t go through life borrowing those fees and getting better,” Buffett said.
Paying the balance will save you more money in interest than any return you could get by investing the money, either in the stock market or in real estate.
Related: How a 25-year-old Latino bought 5 properties in the United States and earns more than $ 200,000 a year.
Interest can increase quickly if you have a balance, so it’s best to pay as soon as possible. According to the Federal Reserve, the average interest rate for credit cards in May remains at an average of 16%.
We are living in very difficult economic times and millions of Americans are losing their income and applying for unemployment benefits, they may not have the resources to face their debt in the future.
If you have a balance on your credit cards, the priority should be to meet your bills and meet your needs. If that means putting your debt payments on hold so you can free up cash then do it.
Many banks are offering their clients payment deferrals and fee waivers to help you ease some of the burden.
Related: How to use the coronavirus help check wisely.
If you use part of your savings to pay off the balance and go out of the red, you might end up back where you started with a couple of accounts payable later if you didn’t have an emergency fund.
If you have a well-funded emergency savings account, you can cover living expenses and meet your debts at the same time. Once you are debt free get used to making full payments so you don’t have to have interests.
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