Why paying off your credit card rather than your mortgage is stupid

It’s a common debate in debt that people prioritise in certain ways based on certain behaviours. A common one being that it is rational to pay off a credit card because that is what buys the shopping or puts fuel in the car.

The belief being that a credit card provides liquidity when needed, but in paying off this debtor first it brushes over two key facts.

1: If you told the credit card holder to go and jump for their money you’d be instantly better off by whatever you owed them, we regularly see settlements done for 10c on the Euro. This saving (assuming it equates to the missed mortgage payment – which is a leap of faith at best) could be used to fund the following month or two for fuel/groceries, and that isn’t to say you couldn’t repeat this process with a mortgage too as a source of financing if you had to, but doing it first is a mistake.

The first rule in personal finance is about prioritisation and while we regularly tell people to burn …

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