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Pay off your debt or invest? That is the question.

In times of high interest rates, troubling economy, and uncertainty the question that most business owners face is whether to pay down their debt or try to invest waiting for better returns.

Let’s say you have $100 in credit card debt with a 20% APR (which is way below the average APR). After a year you would own about $20 in interest. Now, let’s suppose you also have $100 in stocks. The annual average return of the S&P 500 since 1979 has been about 11.5%. After a year you would have about $11.50 in returns.

If the Fed continues to raise interest rates, this difference will only get bigger, and credit card debt, business loans, car loans, and any other interest-bearing debt will likely become even more expensive. So, the choice is fairly easy. Pay off your debt as fast as you can, and then think about investing. Businesses have to find ways to save as much as they can to eliminate debt. FEEPASS is the best way for businesses to save every month on credit card processing fees. Contact us to find out how we can help your business save and pay off your debts.

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