A lot of Americans carry a balance on their credit card: 59% of card holders, or 110 million adults, had credit card debt before the coronavirus pandemic, a 2020 CreditCards.com survey finds.
But if you have the means to pay down your balance, it’s better to do it sooner rather than later, said legendary investor Warren Buffett during the Berkshire Hathaway annual shareholders meeting, which was held virtually this year from Omaha, Nebraska.
A friend of Buffett’s recently came into some money and asked his advice on what to do with it, he recalled. His first question to her was whether or not she had credit card debt. She did and was paying an interest rate of about 18%.
“If I owed any money at 18%, the first thing I’d do with any money I had would be to pay it off,” Buffett told her. “It’s going to be way better than any investment idea I’ve got.”
By paying off the balance, she would save more money on interest than any return she could get by investing the money, whether in the stock market or in real estate or elsewhere, Buffett said. “I don’t know how to make 18%,” he added.