Should I use an inheritance to pay off credit cards?

Question

For context, I received a moderate inheritance and also have several debts with very different interest rates. For context, some are high cost credit cards, while others are a mortgage, student loan, or car loan with manageable payments. For context, I still need an emergency reserve and want to keep retirement saving on track.

Soradin · Accepted Answer

High interest credit card balances can grow quickly, so paying them may improve cash flow and reduce financial risk. For the household plan, whether to pay debt or invest depends on interest rates, tax treatment, cash reserves, risk tolerance, and the purpose of the money. For the household plan, paying high cost debt often provides a predictable benefit, while low cost debt may be weighed against other goals.

Should I use an inheritance to pay off credit cards?

Soradin

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