Question

Which of the following is the best financial situation?

1)You saved enough for your emergency fund and are paying off your credit card debt.

2)You saved enough for your emergency fund and have $2,358.96 on a credit card at a 3.5% APR.

3)You have not saved enough for your emergency fund and have $538.98 on a credit card at a 9.8% APR.

Answer 1

Out of the choices given, the best financial situation is to have enough money saved for your emergency fund and are paying off your credit card debt. You need to make sure you have your emergency fund saved for and then pay off your debt because if you don't and an emergency arises you are likely going to use the credit card again for the emergency. Paying off credit card debt is important but at the same time, paying off your credit card while not adding funds to it is even more important.

Answer 2

The correct answer is number 2: You saved enough for your emergency fund and have $2,358.96 on a credit card at a 3.5% APR.

Step-by-step explanation:

Emergency funds are great to have autonomy while facing hardship. However, if not invested, the money will run out at a certain point. In front of that situation, it is good to have credit in a financial institution. The suitable would be to request the credit before the hardship takes place because banks ask for several requirements to prove someone will be able to be responsible for the credit.