“Pay off or pay down credit card debt with any existing savings,” says Tom Gilovich, psychology professor at Cornell University, co-author of Why Smart People Make Big Money Mistakes and a TIME Moneyland contributor. With credit card APRs averaging nearly 15%, people with credit card debt pay much more in interest than they can earn by having that money invested elsewhere.
If you don’t have any savings, there’s no way to sugarcoat it: You’ll have to make some budget decisions and give some things up. But consider this: If you have a $5,000 credit card balance and an APR at the national average, and you make only the minimum payment each month, you’ll be stuck paying off that debt for 24 years. Whether or not you know where you’ll be living and what you’ll be doing in more than two decades, do you want the one certainty in your future to be credit card debt? Over that time period, you’ll pay more than $7,000 in interest, according to the Federal Reserve’s online repayment calculator.