When you think of high interest savings accounts, you probably do not associate their existence with getting rid of your credit card debt. Financial experts drilled this concept into the mindset of individuals in some far off time, but the concept is making a comeback in modern times. Credit card debt has been around for a long time and so have high interest checking and savings accounts, which may leave you wondering if one is the solution for another, how can it be?
Why High Interest Savings Accounts
There are some obvious and possibly not so obvious reasons for seeking out a high interest savings account to help you battle your credit card debt. Your first option to turn to for savings accounts that pay high interest rates includes online banks, regional banks, credit unions and community banks. These organizations have less overhead and are more customer service focused than many big banks. A quick online or local search will quickly return you half a dozen or so options on banks that offer high interest rate savings accounts. The higher rate of return on your money could, in theory, be used to get rid of your credit card debt.
Debit Instead of Credit
Many high interest savings accounts offer you a debit card to access the funds in your account. If you focus on using your debit card to make purchases instead of your credit card, you will quickly learn the behavior of only buying what you can afford. The move away from using your credit cards will help slow the balance growth on your credit cards and allow you to play catch up on paying them down and eventually paying off the credit card balances.
How Savings Accounts Get Rid of Credit Card Debt
Utilizing a high interest savings account to earn more money that can be applied toward paying down your credit card balances and using your debit card to slow credit card balance growth may be two of the more obvious ways that high interest savings account can help you get rid of credit card debt. This isn’t to say that you should get rid of your credit card altogether though, because having and maintaining a credit card can help to keep your credit history where it needs to be to obtain new credit in the future. This still requires you to use the card periodically and pay off the credit card balance off when the bill is due. In the end, obtaining a high interest savings account helps you to become less reliant on your credit cards, which may be better for your overall financial health.
related visualeconomic articles
