Should You Save for Retirement or Pay Down Credit Card Debt?

Back when I was knee-deep in credit card debt, saving for retirement was about the last thing on my list of priorities. It simply made no sense to me to put away money for the future when my debt was costing me so much in interest.

However, once I fully reviewed my situation, I understood that there may be room for both. It ultimately depends upon your situation, and in order to make the right decision, you’ll have to take a good hard look at both your retirement plans and your current credit card debt.


  • Have You Started Saving? If you currently have nothing put aside for your golden years, then I would suggest starting a modest retirement portfolio, regardless of  your level of credit card debt. Because of compound interest, the earlier you start, the more your dollars will earn over time.
  • Does Your Employer Match? It is important to review your employer’s 401k plan. If they offer any sort of match, consider investing in this option up to the maximum. This is free money provided to you by your employer, and it just makes good sense to take advantage of it, regardless of the amount of your credit card balances.

Credit Card Debt

  • How Bad Is It? If your current situation is dire, and interest fees are eating away at your checking account, you may want to scale back or temporarily suspend retirement savings. If your situation isn’t quite this bad, continue to pay down your balances while still contributing what you can to retirement.
  • Can It Be Restructured? If your credit card debt is significant, you may want to consider restructuring it. There are numerous balance transfer options where you can reduce your interest rate to 0% for a short period of time. Do your research to see if you can save, and if so, you’ll have to decide where to apply the money you’ve saved: to  your credit card balances, or to your retirement portfolio.
  • Do You Have a Plan? If you currently have no plan to pay down and eventually eliminate credit card debt, it’s time you put one into place. Keep your monthly spending beneath what you earn, and figure out other ways to save in your everyday life. Commit these savings to your credit card debts until they’re under control.

Final Thoughts

You should continue to both pay down your credit card debt and also save for retirement. Where you focus the bulk of your efforts will depend upon your situation. However, you won’t be able to make an intelligent decision unless you truly understand the state of each in your life. Ask yourself the three pertinent questions regarding both credit card debt and retirement, and you’ll gain a clearer understanding of each and be able to decide where you should be applying more money.

What do you think? Should you prioritize getting out of credit card debt or saving for retirement?

11 thoughts on “Should You Save for Retirement or Pay Down Credit Card Debt?

  1. Bethy @ Credit Karma

    A balance transfer credit card can be a great way to pay down previously accumulated credit card debt interest-free. But it’s important to finish paying down the debt before the promotional interest rate is over. Otherwise, some cards will make you pay the interest on the full amount you originally transferred.

  2. Miiockm

    I think getting rid of credit card debt should always be the number 1 priority. What’s the point of saving for retirement when the interest on your credit card will eat that away anyways.

  3. Becca

    Credit cards can be a great help if we use it wisely. I agree retirement plan is a wise decision to make for our future,

  4. Tereza Ullinovich

    Having a retirement plan is so very important. A lot of people don’t realize this until it’s too late and they find themselves wondering how to make ends meet. A retirement plan is not as difficult as it seems and doesn’t take as much as you would think. There are a lot of ways to start a plan. If you do some research and you can also get professional advice, even from blogs such as this one, you can come up with a good plan for your future.


  5. Marie

    Paying your credit card debt can any day be the 1st priority over any other investment or savings plan. Credit card debt is like a curse to mankind. So until and unless we get off the burden of debt, we shouldn’t look into anything else. Debt is like a slow poison which gradually makes a person let go off his lifetime savings by being penny less. Where as once we get out of the financial crisis, it will be must easier to make a hassle free retirement plan and settle the future.

    1. Tereza

      I agree. The less debt you have and the better you can manage this, makes your life a whole lot easier. A lot of people get into a lot of debt not even knowing what the outcome will be. But, there are solutions and methods for controlling debt, using it wisely and making the most of it to help one succeed.

  6. KYD

    Controlling debt from a very early age and making sure of not letting it go off the head is as much necessary as breathing is. Where as on the contrary you can have a fair enough time span to establish your retirement settlement. According to me, in order to go for any long term financial planning, it’s urgent to get rid off credit card debt. Once we get a clearance, we can easily plan for the future.

  7. Kel

    I would say that as important as retirement savings is, you are probably better served by getting out of that crippling credit card debt. You can open a lot more doors for yourself financially once that burden is lifted from your monthly budget.

  8. Jeremiah

    I would say putting enough toward retirement to receive the match is important, but debt can be so crippling, so I would pay down credit card debt as quickly as possible. One of the big problems with credit card debt is that if hard times come along it is going to be even more difficult, if not impossible, to service that debt. Paying off that debt makes it much easier to weather difficult storms if need be.

  9. Thomas @ Expertwager

    Bank credit score cards can be a great help if we use it smartly. I believe the fact pension strategy is a great idea to make for our upcoming. Also managing debts from a very beginning age and making sure of not allowing it go off the go is as much necessary as respiration is. Where as on the opposite you can have a reasonable enough time period to set up your pension agreement. Thanks to provide this nice content. I really experienced to study this article.

  10. Marisa

    It’s so funny to think about a retirement fund in terms of compound interest. I say this because people my age (mid-20’s) are not even CLOSE to thinking about this situation when it seems like now is the best time to be thinking about it. Compound interest depends on time like I’ll be depending on my 401k. Why are young people not talking more about this? Retirement shouldn’t be a word for baby boomers. Wonderful article! I’m going to spread the word on this. Thanks!

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