Debt vs invest

Pay Off Debt or Invest the Difference?

The right answer depends on your debt’s after-tax interest rate vs your expected investment return.

The short answer

A 22% credit card debt is a guaranteed 22% return when paid off. The S&P 500 historical average is ~10%. Always pay off credit cards before investing. For a 3.5% mortgage, invest. For a 7% mortgage, it is a coin flip — use the 6% rule as the threshold.

Run the math yourself

These calculators give you the same numbers we used above — with your own inputs.

Loan Prepayment CalculatorSee exact interest saved by paying down debt early.Compound Interest CalculatorCompare against investing the same money.ROI CalculatorCalculate the guaranteed-return value of debt payoff.

Bottom line

Sequence: (1) Emergency fund of one month, (2) Employer 401(k) match, (3) All debt above 6%, (4) Tax-advantaged accounts to max, (5) Remaining low-rate debt, (6) Taxable brokerage. The match is free money. Credit card debt is destroying wealth faster than any investment can create it.

Disclaimer. This is educational, not personalized financial advice. Numbers depend on your specific tax bracket, state, and goals. Verify with the IRS, SSA, or a CPA before acting. See our Financial Disclaimer.