Should I Invest if I Have Credit Card Debt?

When to Pay Off Credit Card Debt First

While paying off high-interest debt and investing can both help you gain financial security, paying off credit card debt should generally take priority over investing. This is primarily because of the high interest cost of credit card debt, which may outweigh investment gains. Here are some instances when it's probably best to pay off your credit card debt before investing.

You Have High-Rate Balances

Credit cards tend to have the highest interest rates when it comes to borrowing. As of May 2025, the average credit card annual percentage rate (APR) was 21.16%, compared with 7.67% for 60-month auto loans and 11.57% for 24-month personal loans. Some credit cards even charge APRs close to 30%. Meanwhile, the average rate of return on stocks has hovered around 10% over the past century. Paying off credit card balances offers a much higher guaranteed return.

You're Struggling to Keep Up With Bills

If you're having a hard time making your regular bill payments, you likely don't have the cash flow to invest consistently. Prioritizing debt repayment frees up money that can go toward investing without the stress of juggling high monthly payments.

Tip: Contact your credit card issuer or a consumer credit counseling agency for help with your debt if you're experiencing financial hardship.

Your Credit Score Is Impacted

High credit card balances increase your credit utilization rate, which is a major factor in your credit score. A lower score makes it harder and more expensive to borrow in the future. By paying down your debt, you lower your utilization, which can improve your score. This can help you qualify for better terms on loans, mortgages or balance transfer offers.

You're Nearing Retirement

If retirement is on the horizon, your investments don't have as much time to grow. In this case, it's generally better to reduce your potential debt load. Eliminating high-interest debt protects your income and ensures you can cover living expenses comfortably.

Learn more: What Is an Investment Time Horizon?

When It May Be OK to Invest With Credit Card Debt

There are some situations where investing before paying off credit card debt—or ideally while paying off that debt—may make financial sense. If you decide to balance both, continue to make at least the minimum payments on your credit card on time to avoid late payment fees, penalty APRs and damage to your credit score.

Your Employer Matches Retirement Contributions

An employer 401(k) match is one of the best returns you can get—it's essentially free money your employer provides to encourage you to save for retirement. Take advantage of this benefit by contributing at least up to the maximum employer match and use the rest of your disposable income to pay off your credit card debt. Missing out on a match means leaving free money on the table. Once you've paid off your credit cards, you can contribute more money to your retirement plan to help you reach your retirement goals.

You Qualify for a Low-Rate Credit Card Offer

If you can take advantage of a 0% introductory APR offer you can use to make a balance transfer, you may free up time to invest while avoiding interest. During the interest-free period, the return on your investments may outweigh credit card interest. Be sure to factor in the balance transfer fee and have a plan to pay off the balance before the promotional period ends. If you're strategic, this can create breathing room to start investing without falling behind on debt.

Learn more: What Is a Balance Transfer and Is It Worth It?

How to Pay Off Credit Card Debt Fast

The faster you pay off your credit card debt, the sooner you can start investing. Investing early and often gives more time for interest to compound. Here are some strategies to pay off credit card debt quickly.

• Stop using your credit cards. To pay your debt down faster, shift your spending to your debit card (or even cash). This way, you avoid adding to your credit card balance and worsening your debt burden.
• Pay more than the minimum. Making only minimum payments mostly covers interest, which increases the time it takes to pay off your balance. By increasing your payment, your balance goes down faster and you pay less interest over time.
• Increase your income. Having more funds available helps you get rid of debt faster. Look for opportunities to earn more, for example, by working toward a raise, taking on a second job, starting a small business, picking up a side hustle or selling valuables that you could live without.
• Cut expenses aggressively. Look for areas where you can cut expenses, especially nonessential spending. The more you reduce your discretionary spending, the more you can funnel to your debt.
• Use an accelerated payoff plan. The debt snowball and debt avalanche methods both have you strategically pay off credit card balances by focusing on one at a time. The difference is the debt snowball method targets the lowest balance first for quick wins, while the debt avalanche method tackles the highest-rate balance first to save more money.
• Transfer to a 0% introductory APR card. Transferring a high-rate balance to a 0% intro APR credit card gives you a window of time to pay down debt interest-free. Since your payments don't have to cover interest, you can knock out a significant portion of your balance—if not all of it.
• Consolidate balances. Using a lower-rate debt consolidation loan to pay off balances gives you a set monthly payment and repayment schedule. Repayment is simpler and less expensive, especially if you pay extra when you can.

The Bottom Line

While the math usually favors paying off your credit card debt before investing, there are some exceptions. Consider whether you can comfortably do both, especially if your employer matches your retirement contributions or you can qualify for a low-rate balance transfer. Finding a balance between both goals allows you to knock out your credit card debt while you take advantage of compounding investment gains.

As you pay down your debt, consider signing up for free credit monitoring from Experian. You'll get real-time alerts to changes in your credit profile, allowing you to see just how all your hard work is paying off for your credit score.