141 votes

What should I do with $4,000 cash and High Interest Debt?

Every $1,000 you use to pay off a 26% interest rate card saves you $260 / year. Every $1,000 you use to pay off a 23% interest rate card saves you $230 / year. Every $1,000 you put in a savings ...
Grade 'Eh' Bacon's user avatar
121 votes
Accepted

Should I pay for a computer up-front or on finance?

This is pretty simple, and doesn’t require too much math. First, talk of liquidity is not necessary. You are currently paying $3000 extra on your mortgage every month. (Nice!) You certainly would ...
Ben Miller's user avatar
  • 116k
121 votes

I have 9,000 cash. What debt should I pay first?

Generally, there's no particular "win" to paying off the larger debt first, all things being equal. Pay largest interest rate first. (Now, some advisors say there's a certain logic to paying off ...
Harper - Reinstate Monica's user avatar
80 votes

What stops you from using fixed income in developing countries?

assuming the currency value with respect to USD stays stable in that year. This is where your analysis breaks down. The fact that the foreign bond pays a higher interest rate indicates that the ...
D Stanley's user avatar
  • 135k
79 votes
Accepted

Can I lend a small amount of my own money to a bank at the federal funds rate?

You can lend at any rate you like. Finding a borrower is a different matter, as is ensuring that the borrower pays it back. Few banks will borrow from you at the Fed rate. Currently, rates on savings ...
Money Ann's user avatar
  • 3,789
69 votes
Accepted

What would be a recommended interest rate for an unsecured loan to individuals with mediocre credit rating and income close to expenses?

You're not a bank, so don't try to think like one. Banks base their interest rate off of the average risk of default for similar borrowers based on carrying multiple loans to spread the risk. In your ...
D Stanley's user avatar
  • 135k
64 votes

What should I do with $4,000 cash and High Interest Debt?

If it were me, I would pay off the 23%er. That is as long as you don't borrow anymore. Please consider "your hair on fire" and get that 26%er paid off as soon as possible. From my calculations ...
Pete B.'s user avatar
  • 76.5k
54 votes
Accepted

Is it possible to lock in a high interest rate in savings, when general interest rates are high?

Flexible savings accounts are almost all variable interest, meaning the rates go up and down with market rates. The reason for this is that if they did not, people could pay into the fixed interest ...
DJClayworth's user avatar
  • 33.4k
51 votes

Pay everything now or gradually?

To put this into perspective, you are paying ~$1500 interest annually (gradually decreasing), or $132 monthly. All the while, you have money sitting in your bank account doing seemingly nothing. ...
void_ptr's user avatar
  • 3,128
50 votes
Accepted

Preapproved for mortgage loan but won't tell me interest rates

If you are truly preapproved (not just prequalified) then they are required to supply you with a Good Faith Estimate within 3 days. The interest rate will appear on that document. It's subject to ...
stannius's user avatar
  • 5,301
42 votes
Accepted

Which mortgage should I pay off first? Same interest rate and mortgage length

You haven't accounted for what happens when the small loan is completely paid off. Seven years into the aggressive payoff schedule you need to shift all original principal and interest payment and the ...
mhoran_psprep's user avatar
37 votes
Accepted

Is my back-of-the-envelope calculation about taking out a loan to invest into the markets flawed?

Any scheme of borrowing money to "invest" is in fact a gamble and should be avoided. Stick to your own money for investments. Nobody can predict the market and neither can you. 4% interest ...
Manziel's user avatar
  • 7,422
37 votes

I have to pay back my student loan. When is the best time to do it?

That mortgage would be lowered by twice the amount of my student loan. doesn't sound too bad, since the other place you can put the money is into "down payment" and that has between 1:1.5 ...
Ben Voigt's user avatar
  • 6,789
34 votes

What should I do with $4,000 cash and High Interest Debt?

The difference in interest is not a huge factor in your decision. It's about $2 per month. Personally I would go ahead and knock one out since it's one less to worry about. Then I would cancel ...
D Stanley's user avatar
  • 135k
34 votes

Does "monthly interest of 1.5% AER" mean that I will get a 1.5% interest every month?

"AER" means "Annual Equivalent Rate". This means that if you put in £100 on January 1st, it will pay you some amount of interest each month (roughly 1/12th of 1.5%, but actually more like 1/12th of 1....
Grade 'Eh' Bacon's user avatar
32 votes
Accepted

What does a mortgage percentage rate really mean?

The interest rate is the annualized interest rate you'll pay on the remaining principal balance each month. Since it's annualized, you'll divide the rate by 12, and pay 2.95%/12 = 0.24583% of the ...
D Stanley's user avatar
  • 135k
32 votes

What stops you from using fixed income in developing countries?

Because currency risk is not the only risk in this scenario. The risk of the developing country (the state) not servicing their obligations are the bigger risk, hence the very high interest rates. ...
ssn's user avatar
  • 1,466
31 votes

At 3% inflation rate, is $100 today worth $40 20 years ago?

$100 20 years ago is still worth $100 today. What changes is what that $100 can buy. Inflation is a measure of how purchasing power changes, and compounds over time. So a better explanation would be: ...
D Stanley's user avatar
  • 135k
31 votes
Accepted

Is there any advantage to a longer term CD that has a lower interest rate than a shorter term CD?

Taking a longer-term CD with a lower interest rate could make sense if you expect CD interest rates to drop in the near future. Suppose you could get a 6-month CD with a 5.1% interest rate, or a 12-...
Nuclear Hoagie's user avatar
29 votes

Can I lend a small amount of my own money to a bank at the federal funds rate?

Buying Treasury Bills is loaning to the U.S. government. The 4 week Treasury Bill with an issue date of 8/27 got a 2.098% investment rate. The 13 week Treasury Bill with an issue date of 8/29 got a ...
S Spring's user avatar
  • 3,572
28 votes

What should I do with $4,000 cash and High Interest Debt?

With all due respect to The David, the $1000 is best put against 20%+ debt, no sitting in checking as part of some emergency fund. I'd agree with the decision to pay off the lower rate card. Why? ...
JTP - Apologise to Monica's user avatar
28 votes
Accepted

If US Treasuries at yielding 4-5% right now, why can't I find an ETF that yields that amount?

Over the last 12 months, SGOV yielded 1.84%, but the current SEC yield (30 days ending on the last day of last month) is 4.41%. If you want to know what a fund or ETF yielded most recently, look at ...
Stan H's user avatar
  • 7,241
28 votes

I have to pay back my student loan. When is the best time to do it?

Anytime you can borrow money for less than 1% APR interest, the perfect time to pay that off is "upon your death". You will never be able to borrow money more cheaply in your whole life. ...
Harper - Reinstate Monica's user avatar
27 votes

How can bonds reach 0 and negative interest rates? why would someone buy them?

And how can bonds reach 0 and negative interest rates? 0% interest is simple. You just skip the coupon payments and get your money back when the bond matures. Negative interest rate bonds are issued ...
Manziel's user avatar
  • 7,422
25 votes
Accepted

Paying off a loan with a loan to get a better interest rate

I don't know what rates are available to you now, but yes, if you can refinance your car at a better rate with no hidden fees, you might save some money in interest. However, there are a couple of ...
Ben Miller's user avatar
  • 116k
24 votes

Is my back-of-the-envelope calculation about taking out a loan to invest into the markets flawed?

Personal rule for borrowing money in order to 'invest' in any kind of generally available thing: Assume your investment will lose all of its value and you lose your job and need to live off your ...
Kaz's user avatar
  • 2,489
23 votes

Pay everything now or gradually?

Reasons to not close your debt: You can make more than 6.8% return somewhere else You fear an unexpected expense in which you need temporary cash Reasons to close your debt: Even if you believe you ...
Yoshi Onimusha's user avatar
23 votes
Accepted

Are lower interest rates bad for the lending perspective of banks?

Many factors go into the methods banks use to determine what interest rates they charge on loans. Many other factors go into determining how profitable those loans are, or how readily consumers use ...
dwizum's user avatar
  • 17k
23 votes
Accepted

0 APR Promotional Offer For Credit Cards

Would you be able to get the same promotional offer again? You can't get the promotional offers on the same card immediately, and some are once in a lifetime. You might be able to string together ...
Hart CO's user avatar
  • 70.5k
21 votes

Preapproved for mortgage loan but won't tell me interest rates

This is definitely strange. I've had a number of occasions where I've contacted a bank and asked what their interest rates were on one type of loan or another, and they've always been very willing to ...
Jay's user avatar
  • 22.7k

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