Don't Pay Off Your Credit Card Early! Invest the Difference.

  Pay the minimum and make a return on the difference . 

Paying off high interest credit cards early is sound financial advice, but if you're not being charged interest on purchases made, paying off the balance early is working against you. 

It's all about opportunity cost. Instead of paying off your credit card early, pay the minimum and invest the difference in a safe, high-yield savings account that will pay you interest!

Here's how:

Let's say, for example, that the above offer is being advertised by Best Buy and you're looking at buying some new tech for yourself. You add your items to the cart and your total comes out to $3,000.

First, you need to calculate what the ACTUAL minimum will be. The actual minimum is the amount you will have to pay each month so that you don't pay interest at the end of the promotion period. 

Using the above example, $3,000 divided by 24 months comes out to $125 per month.

If you can afford to pay the actual minimum then make your purchase and continue reading.

Once you're done setting up your new tech look at your credit card statement. You'll see that the monthly minimum payment is far lower than the actual minimum payment you calculated above. For this example, let's say it's $45.

This is where the devil lies...in the details.

You're going to subtract the monthly minimum payment from the actual minimum. The difference should be $80.

You're going to invest that $80 in a high-yield savings account that pays 0.5% APY (or more) each month. If you don't have an account yet, check out the following article (7 Best High-Yield Online Savings Accounts of September 2021 - NerdWallet).

To recap, you will be paying the monthly minimum ($45) on your Best Buy credit card and investing $80 into your high-yield savings account. The two add up to what your actual minimum will be ($125).

Fast-forward to month 24 and you will have paid $1,080 on your credit card and you would have invested $1,920 into your high-yield savings account. 

Using this (Savings Calculator - NerdWallet), you should also notice that you will have $90.84 remaining in your account after you use the $1,920 to pay off the remaining balance on your credit card.

By doing a little financial hacking, you just created close to $100 with little effort on your part. 

Looking for opportunities such like this one allow you to reap money that most people miss.

Have some of your own financial hacks? Comment below.