Looking for a higher rate of return on your money? The answer might not be in your HYSA (High Yield Savings Account). Want a sure rate of return that blows those bank rates out of the water? The answer may surprise you – pay off your debt! 

While we all like to see a large savings cushion making 4-5% in an HYSA or money market account, that money could be working even harder for you by paying off your existing debt, if you have any. The average federal student loan rates in 2023 ranged between 5.5-8.05%, depending upon loan type.* The average auto loan interest rate in 2023 was 7.18% for new cars and 11.93% for used cars.** In addition, the average credit card annual percentage rate was a whopping 22.8% last year.***

While having cash stashed aside may help us sleep better at night, if we are holding onto debt at the same time, this is really a false sense of security. Your money could be working up to four times harder for you by paying off your existing debt than remaining in a bank account. Does diminishing your reserve account make you feel uneasy? That is ok! Channel that discomfort to fuel some changes! Adjust your spending habits, fine tune your budget, and even look at ways to increase your income! This laser focus will not only help you stay out of debt, but can fast forward your wealth building. When we are comfortable, we tend not to take action. Paying off that debt will not only let your money work harder for you, but can propel you to reach your financial goals even faster!      

*https://studentaid.gov/understand-aid/types/loans/interest-rates

**https://www.nerdwallet.com/article/loans/auto-loans/average-car-loan-interest-rates-by-credit-score#:~:text=In%20the%20fourth%20quarter%20of,the%20VantageScore%20credit%20scoring%20model.&text=Superprime%3A%20781%2D850.,5.64%25.

***https://www.consumerfinance.gov/about-us/blog/credit-card-interest-rate-margins-at-all-time-high/#:~:text=Credit%20card%20average%20APR%20margin,collecting%20this%20data%20in%201994.

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