It has always been the case that you are better off paying credit card debts -- in fact most bank loans as well -- than putting the money into savings accounts. By the nature of banks, that they have to make a profit, they pay less interest on savings than they charge on loans. I believe that was also the case before banks (pawn shops and the like).
The difference now is that it is very obvious. When the difference was between 13% on credit and 10% in savings there wasn't much incentive, but now that most savings have dropped below 1% (i.e. virtually nothing in return unless you have very large amounts invested) it is very beneficial to clear credit card and other loans as fast as possible instead of saving.
![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
mmmag
no subject
Date: 2009-04-10 07:01 am (UTC)The difference now is that it is very obvious. When the difference was between 13% on credit and 10% in savings there wasn't much incentive, but now that most savings have dropped below 1% (i.e. virtually nothing in return unless you have very large amounts invested) it is very beneficial to clear credit card and other loans as fast as possible instead of saving.