1. My credit card bill is $7,500
2. My savings account balance is $6,000
3. I have $400 each month I can use towards one of these plans.
Which of the following would be a better plan of attack?
A. Close my savings account, and apply the $6,000 towards the credit card bill. I will then pay off the balance within four months.
B. Keep my savings account balance, pay $400/month towards the credit card bill and eventually pay it off in about 1.5 years.
C. Bring my savings account to the minimum $4,000 balance and use the other $2,000 that I withdraw to pay down my credit card balance. It will then take me a year to pay off the credit card.
D. Downgrade my savings account to a lower class, with a minimum of $2,000. Apply the $4,000 to the credit card, and then pay off the balance in about eight months.
In all three scenarios, once the credit card balance is gone I would then have $400/month to add to my savings account and/or my mutual funds.
Kind of asking for opinions. I know you may not be a financial guru, but I’d like to know what you’d do.
* Not actual numbers