Pay Off My Credit Card or Invest?
Keep the balance and invest, or pay the card off first? Put in your real numbers and see both plans side by side. Both plans spend the same amount every month. The only difference is where the money goes. This tool is for education, not financial advice.
Your credit card
All three are on your statement.
Your money
On top of the minimum payment. This is the money you're deciding about.
Savings you'd either put on the card or invest. Leave at $0 if none.
The market
Paying off your card first leaves you $3,945 ahead.
Paying off this card is a guaranteed 22% return. To come out ahead by investing instead, the market would have to earn more than 22% every single year, with no down years.
| Measure | Card firstPay off the card first | Invest insteadInvest instead |
|---|---|---|
| Card paid off in | 1 year, 3 months | 4 years, 4 months |
| Interest paid to the card | $1,171 | $4,477 |
| Card balance left | $0 | $0 |
| Invested | $93,144 | $89,199 |
| Net worth (invested minus card) | $93,144Ahead | $89,199 |
Net worth over time
What you have invested minus what you still owe on the card, for each plan. The dotted lines mark when each plan pays off the card.
Year by year
| Year | Pay off the card first | Invest instead | ||||
|---|---|---|---|---|---|---|
| Card | Invested | Net worth | Card | Invested | Net worth | |
| Today | $8,000 | $0 | -$8,000 | $8,000 | $0 | -$8,000 |
| Year 1 | $1,445 | $0 | -$1,445 | $6,760 | $4,957 | -$1,803 |
| Year 2 | $0 | $6,349 | $6,349 | $5,218 | $10,272 | $5,055 |
| Year 3 | $0 | $14,739 | $14,739 | $3,300 | $15,972 | $12,672 |
| Year 4 | $0 | $23,736 | $23,736 | $915 | $22,084 | $21,169 |
| Year 5 | $0 | $33,383 | $33,383 | $0 | $30,600 | $30,600 |
| Year 6 | $0 | $43,727 | $43,727 | $0 | $40,743 | $40,743 |
| Year 7 | $0 | $54,820 | $54,820 | $0 | $51,620 | $51,620 |
| Year 8 | $0 | $66,714 | $66,714 | $0 | $63,283 | $63,283 |
| Year 9 | $0 | $79,468 | $79,468 | $0 | $75,789 | $75,789 |
| Year 10 | $0 | $93,144 | $93,144 | $0 | $89,199 | $89,199 |
How the two plans work
Pay off the card first: the minimum plus your extra money all go to the card. Cash you have today goes on the card too. Once the card hits $0, that whole monthly amount gets invested.
Invest instead: the card gets only its minimum payment. Your extra money and any cash you have today get invested right away. Once the card is paid off, the minimum gets invested too.
Both plans spend exactly the same amount every month, so it's a fair comparison.
What this assumes
- Your minimum payment stays the same. Real minimums shrink as the balance drops, which makes the payoff take even longer. So this is the version that's kindest to investing.
- The market earns the same return every year. Real markets go up and down. The card's interest rate doesn't.
- No new charges on the card.
- No taxes, fees or inflation. Taxes on investment gains would make investing look worse, not better.
Tools get you numbers. Coaching gets you a plan.
Want help deciding what to pay off, what to invest and in what order? Book a free 30 minute consultation and we'll build the plan together.